At the end of September there were 76 exchange-traded funds, and 13 exchange-trade baskets of stocks called Holdrs. In 1998 ETFs held just $15.6 billion.
Most ETFs offer lower costs and more tax advantages than do traditional mutual funds, as well as offering the flexibility to trade funds throughout the day, rather than just once a day. On the other hand, investors end up paying brokerage fees for those additional privileges.
For starters, investors must pay a brokerage fee each time they buy or sell an ETF. For individuals who prefer to invest in their funds on an ongoing basis (also known as dollar-cost averaging), those fees can cost an arm and leg over the long haul.
According to Dow Jones the largest ETFs are:
- $24.0 billion – Standard & Poor’s 500 SPDR, managed by State Street Global Advisors
- $13.7 billion – The Nasdaq-100, managed by the Bank of New York
- $ 3.05 billion – The S&P 400 Midcap SPDR
- $ 2.10 billion – The Biotech HOLDR
- $ 1.90 billion – The Dow Jones Diamonds
Currently, four fund companies offer exchange traded funds. State Street Global Advisors has 50% of the total ETF assets, down from 65% at the end of 1999. The Bank of New York currently has 29%, Merrill Lynch 11% and Barclays now has 10% after rolling out 29 new ETFs this year.