Archipelago To Launch Tech ETF

November 08, 2005

The electronic exchange announces plans to launch ArchEx Tech 100 ETF (from index that was formerly Pacific Tech 100) in move to compete with QQQ.

 

Archipelago announced the forthcoming listing of its first ETF.  The electronic exchange has filed with the SEC to create the ArcaEX Tech 100 ETF, which it said it expected to launch in early 2006.  The move comes at an interesting time, as the New York Stock Exchange (NYSE) nears a final vote on approval of its merger deal with Archipelago.  Public listing of the NYSE could occur as soon as late this year, and the Archipelago merger is expected to be completed in early 2006.

The new ETF is based on the index that was formerly the PSE Tech 100 Index, which was operated by Archipelago's now fully owned subsidiary, the Pacific Exchange, Inc.  The new ETF, which would trade under the ticker AXT, will be managed in conjunction with Ziegler Capital Management, LLC.  The product would line up nicely against the QQQ Nasdaq 100 ETF, as Archipelago moves toward a merger with Nasdaq's chief competitor, the NYSE.  Ironically, the QQQ is often Archipelago's biggest trading equity by share volume.  The QQQ is also the world's third largest ETF by assets, has long been a volume trading leader, and rode the tech boom to new heights in the late 1999.

"As an all-electronic exchange, revolutionizing an industry through technology, it's a natural fit for Archipelago to launch an ETF based on this successful technology index, and to leverage an asset we acquired in our acquisition of the Pacific Exchange," said Jerry Putnam, CEO of the Archipelago Exchange. "ArcaEx has emerged as a leader in the trading of ETFs and will continue to look for opportunities to provide value added trading and listings services in the ETF arena."

The ArcaEx Tech 100/ Pacific Tech 100 Index has been in existence since 1982, and is a commonly referenced as a benchmark for the U.S. tech sector. This price-weighted Index is comprised of 100 listed and over-the-counter securities including computer hardware, software, semiconductors, telecommunications, data storage and processing, electronics and biotechnology. Modeled as a multi-industry technology index, the objective of the Index is to provide a performance benchmark of leading technology companies operating across a broad spectrum of industries.

Because the index is price-weighted, it tends to he weighted more to the smaller cap end of the spectrum. The The index will maintain it's current methodology.  Following is a comparison of the recent returns of the ArchEx Tech 100/Pacific Tech 100 index to QQQ:

Total Returns*

Pacific/ ArchiEx Tech 100 Index Total Returns

QQQ Nasdaq 100 ETF Total Returns

YTD

5.07

-1.18

2004

11.73

10.51

2003

52.14

49.18

2002

-33.33

-39.94

2001

-15.59

-30.89

2000

-16.22

-36.94

1999

116.40

85.59**

1998

54.60

39.63**

1997

19.97

21.64**

Annualized Total Returns

 

 

3 Year

28.51

24.42

5 Year

-4.65

-14.85

10 Year

14.93

7.50**

15 Year

20.03

12.99**

Source: Morningstar.  *It must be noted that here we are comparing Pacific Tech 100 index data to QQQ fund data, and the Pacific/Archi data does not reflect the cost of managing a fund. **Data for these data points is from the Nasdaq Composite index, which while it has similar historical performance to the Nasdaq 100 is by no means identical.

 

 

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