Hedge funds are increasingly using exchange traded funds, particularly to short the market or various sectors, Reuters reports.
Use of ETFs has doubled in the past year, particularly because hedge funds like their flexibility for shorting, a
Trading in equity derivatives has reached $7.4 billion this year, up 23% from 2002, and ETFs comprise a full 77% of this market.
Money managers have also greatly cut back on their use of derivatives specialists, from 60% in 2001, to just 20% in 2003.