Actively-Traded ETFs Get Off To A Good Start in Frankfurt

Ulrika Lomas, Tax-news.com, Brussels

23 September 2000

On Monday the Frankfurt-based Deutsche Borse began to trade actively managed funds in the XTF (Exchange Traded Funds) sector, racking up turnover of $2.6m in 11 listed products, representing 15% of the day's XTF activity, 95% of it via Xetra, the Frankfurt Exchange's electronic trading platform. A biotech equity fund was the most heavily traded fund share, with a volume of over $1m traded, followed by a fund for technoshares.

The German exchange has been trading index or passive exchange traded funds since April in the XTF market sector. Daily trading volumes have nearly tripled from $5.81m to $17m since the market was launched seven months ago. October saw a volume of nearly $400, about 135% over the previous month's volume and an all-time high.

ETFs allow investors to buy shares in a fund and the shares, which cover an entire portfolio of securities, can be traded like equity. 'Passive' or 'index' ETFs track an index or sub-index or some combination of sub-indexes, by buying and selling the member stocks to mirror the index's components. Actively managed funds can be just about anything else and have some similarities to the UK's investment trusts.

ETFs are seen as simple and tax efficient investment vehicles. Deutsche Börse has forged ahead of other European and US exchanges with the launch of the first active versions of ETFs.

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