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ETFs Gaining In Popularity

Philip Morton, Investors Offshore.com

28 February 2001

The popularity of Exchange-Traded Funds (ETFs) has hotted up as they have become the latest trend to interest many fund companies.

ETFs hold baskets of stocks or bonds similar to an index mutual fund. According to the Investment Company Institute, all ETFs listed on US exchanges at the end of last year were equity index funds with total assets valued at around $65.6 billion.

Now the Bloomberg news service has reported that some fund companies want the opportunity for their managers to choose stocks for their ETFs. Nuveen Investments, State Street Global Advisors and Barclays Global Investors have all annouced plans to file with the Securities and Exchange Commission (SEC) in the attempt to offer actively managed funds. 'One way or the other (actively managed ETFs) are coming unless the SEC totally shuts the idea down,' said Russel Kinnel, director of fund analysis at Morningstar Inc., a Chicago-based fund research firm.

Barclays now operates 72 ETFs across the globe, with 60 of them based in the US, and valued at about $13 billion. It launched ts first equity ETF 5 years ago and does not appear to have looked back with products such as ETFs focused on specific sectors in biotechnology and real estate.

Spokesman for Barclays Global, Tom Taggart, confirmed the company is aiming to file with the SEC for a quantitatively managed ETF by the year's end but as yet no date has been revealed. 'We are really concentrating on rounding out the full pie of index-linked ETFs first, so that people have a lot of different choices before we move on,' he said.

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