Investing July 30, 2002

Equity Swoon Strikes ETFs in June

July 30, 2002 (PLANSPONSOR.com) - Assets of exchange-traded funds (ETFs) decreased by nearly $4 billion in June, but international ETFs managed to gain ground.

Reported by

Nevin E. Adams

An ETF is similar to a mutual fund, but trades like a single stock. Like a mutual fund, an ETF is a basket of stocks, most typically reflecting a particular index, specific market or geographic sectors.

Assets of domestic ETFs decreased by $3.95 billion, while assets of international ETFs increased by $94 million, according to the Investment Company Institute (ICI).

Broad-based ETF offerings declined by more than 4%, but domestic sector/industry ETFs shrank by more than 9.6%. However, sector/industry ETFs comprise only about 10% of the total exchange-traded funds.

Gross issuance of ETFs was down about a third from the $12.7 million issued in May, while gross redemptions were somewhat higher. On a net/net basis, the value of shares issued exceeded that of shares redeemed by $3.98 billion in June.

Sixty-eight ETFs tracked domestic stock indexes in June and held assets of $81.69 billion. Among the domestic ETFs, 35 used broad-based indexes and 33 ETFs targeted sector or industry indexes.

Statistics contained in the Institute’s monthly ETF report have been obtained from information provided to ICI by exchange-traded funds. Trust-issued receipts, such as Holding Company Depository Receipts (HOLDRS), are not included in the report because registered investment companies do not issue them.