ETFs Ravaged By Last Thursday's Flash Crash

ETFs have been popular tools for hedging purposes among institutional investors, but that reputation may be vulnerable in the wake of last Thursday's "flash crash" that saw scores of ETFs trade below $1. When the New York Stock Exchange released its list of 173 securities that were affected by the sell-off, 111 of them were ETFs while the Nasdaq's list of 281 securities inlcuded 193 ETFs, according to Reuters. Even low volume ETFs like the SPDR S&P International Dividend ETF DWX saw dramatic plunges. DWX traded for as low as a penny. Docile fare like the Vanguard Value ETF VTV and the Claymore/SWM Canadian Energy Income ENY saw their prices cut in half due to the flash crash. ETF issuers like BlackRock BLK and State Street STT blamed exchanges for the plunges endured by ETFs at the hands of the flash crash, but investors seemed fearful that many ETFs fell more than the indexes they track. ETF issuer Vanguard recommended clients use limit orders for their ETF trades, according to Reuters.