The Popularity of ETFs

The Popularity of ETFs

The growing interest in exchange-traded funds ("ETFs") is one of the notable developments in the area of investment management over the past few years. During the year 2000, the number of ETFs increased from 30 to 80, and the amount of assets held by ETFs nearly doubled from $34 billion to $66 billion.¹ While the total amount of ETF assets at the end of 2000 was still relatively small when compared to the approximately $4 trillion of assets in equity open-end investment companies ("open-end funds" or "mutual funds"), ETF assets were much closer to the $89 billion of total assets invested in unit investment trusts ("UITs") and the $135 billion of total assets invested in closed-end investment companies ("closed-end funds").² Moreover, during the first three quarters of 2001, net new investment in ETFs amounted to approximately $24 billion, as compared to approximately $13 billion for equity mutual funds.³ By the end of September 2001, shareholders had invested more than $64 billion in a total of 92 ETFs.⁴ Trading in ETF shares reportedly has accounted for as much as two-thirds of the daily volume on the American Stock Exchange ("AMEX").⁵

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Footnotes

1	Investment Company Institute ("ICI"), Exchange-Traded Funds Statistical Collection, Feb. 8, 2001. Except for this ICI release, the ICI statistical releases cited in this concept release may be found under "Current Statistical Releases" or "Additional Statistical Releases" at http://www.ici.org/facts_figures/.
2	ICI, Trends in Mutual Fund Investing July 2001, Aug. 30, 2001 (for year-end 2000 mutual fund assets); Unit Investment Trust Data July 2001, Aug. 21, 2001 (for year-end 2000 UIT assets); Closed-End Fund Assets, 1990-2000 (for year-end 2000 closed-end fund assets).
3	ICI, Exchange-Traded Fund Assets, Oct. 19, 2001 (for third quarter 2001 net investment in ETFs); ICI, Exchange-Traded Fund Assets June 2001, July 24, 2001 (for second quarter 2001 net investment in ETFs); ICI, Exchange-Traded Fund Assets March 2001, Apr. 26, 2001 (for first quarter 2001 net investment in ETFs); and ICI, Trends in Mutual Fund Investing September 2001, Oct. 29, 2001 (for year-to-date net investment in mutual funds through third quarter 2001).
4	ICI, Exchange-Traded Fund Assets, Oct. 19, 2001.
5	Aaron Lucchetti and Ken Brown, Spiders and WEBS: Amex Is Back, Thanks To a Tradable Variety of Index Mutual Funds, Wall St. J., Feb. 22, 2000, at A1.