It’s true that almost every mutual fund company offers some sort of index fund based on the S&P 500 benchmark, often attracting a fair share of the pie for index products. But the mutual fund industry is a multitrillion-dollar industry with plenty of room for products that appear to be very similar.
Though they are often set aside or excluded in discussions about exchange-traded funds, the assets under management for Merrill Lynch’s Holding Company Depositary Receipts, or HOLDRs, have been growing steadily right alongside standard ETFs.
New Sector Indexes Offer Some Advantages
The last month has seen the launch of tradable blue chip global sector indices by FTSE and Dow Jones. Introduced on February 12 and developed in consultation with Merrill Lynch, the FTSE global sector indices cover 11 sectors.
Some in the ETF industry think that Barclays’ new iShares Cohen & Steers Realty Majors Index Fund, launched February 2 with an undisclosed amount of startup capital, will appeal to institutional investors; others consider it a retail product. Barclays says it has appeal in both spheres.
Everest Funds Management LLC, located in Omaha, Nebraska, launched a fund of ETFs December 1, 2000. The concept is new, and this is the first fund of ETFs ever to be launched.
When the American Stock Exchange released its year 2000 statistics, it gleefully noted that the amount of money invested in ETFs, including HOLDRS, had more than doubled to $70.3 billion in invested assets, up from $35.9 billion at the end of 1999. But upon closer inspection of the 2000 year-end data, a skewed picture emerges.
Despite the bruising the Nasdaq took last year, the market system broke records for volume and dollar value of shares traded.