Barclays' Exchange Traded Funds Fail To Do As Well As Expected

by Philip Morton, Investors Offshore.com

20 August 2001

Barclays Global Investors, which has launched 67 index linked ETFs recently announced that of those, 31 have not yet gained $50 million in assets.

The number of exchange traded funds in the US has leapt from 30 two years ago, to 91 at the last count, and assets in the market for the funds, which mimic market benchmarks, and as the name suggests can be traded throughout the day, have reportedly swelled to $76 billion since the first fund was introduced in 1993. However, the growth has been concentrated in two main funds, which has masked lacklustre performances from many of the other ETFs.

Christopher Traulsen, analyst at fund tracker Morningstar Inc., believes that he can explain why: 'They're slicing and dicing the universe of equities too finely with some of these funds,' he observed.

Although Barclays refuses to say how many of its 67 funds earns a profit, Lee Kranefuss, the CEO for the ETF department said that they were not concerned by the progress that the iShares funds were making. 'We're very comfortable with the number of funds right now in the $10 to $20 million range,' he said. 'That's not a problem for us. As the world's largest manager of index-tracking funds, we have huge scale.' He added that Barclays would be willing to continue to sponser small funds because they believe that as investor tastes change, they will come into favour.

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