Europe

News Roundup: 1st Indian ETF, Dow 2001 Data, CBOT-Dow Alliance

Europe

India Launches First ETF

India's Benchmark Asset Management Company yesterday introduced the country's first exchange-traded fund (ETF) based on Standard and Poor's broad CNX Nifty Index. The new stock basket will be traded on the Capital Market segment of National Stock Exchange, and its 0.80% expense ratio makes it one of the cheapest funds available to Indian investors.

As ETFs continue their global expansion, investors in an increasing number of countries are discovering the low costs and diversification that these funds offer. Dhirubhai Mehta, chairman of Benchmark Asset Management Company, said that India's first ETF "fulfills a real need of the investing community." Mehta also noted that the CNX Nifty fund is the first ETF to be introduced in an emerging Asian economy.

The S&P Nifty Index is comprised of 50 large-cap Indian companies from all major sectors.

Yesterday's launch brings the total number of global ETFs to 204, not including Merrill Lynch's HOLDRs. There are currently 18 firms managing exchange-traded funds around the globe, and half of all ETFs are are listed outside the United States. Barclays Global Investors and State Street Global Advisors offer a majority of the funds, but many firms, including the Vanguard Group, have entered the ring as ETFs have grown in popularity and close in on $100 billion in assets globally.

Another testament to the growth of ETFs is that they account for over 60% of the trading volume on the American Stock Exchange (AMEX). Interestingly, ETFs were "invented" by an AMEX commodities trader as a remedy for the exchange's dwindling trading volume, and the AMEX has made a considerable effort to promote the products through investor education and cross-trading agreements with foreign exchanges. Despite its first mover status, the AMEX does face challenges from other exchanges, most notably its old rival the New York Stock Exchange. The Big Board has already cited unlisted trading privileges and cross-lists some of the AMEX's most popular ETFs.

2001: Global Snapshot

And now a quick big-picture look at the year that was, including the best and worst sectors in 2001.

Index 2001 year-end performance
Dow Jones Industrial Average
-7.09%
Dow Jones STOXX 50
-18.65%
Dow Jones Asian Titans 50
-26.07%
Dow Jones Global Titans 50
-13.90%

United States
Winner: Consumer Noncyclical
1.11%
Loser: Utilities
-28.54% *
Europe
Winner: Basic Resources
11.65%
Loser: Technology
-42.10 %
World
Winner: Retail
3.08%
Loser: Technology
-29.25%

*a close call, U.S tech slid -28.45%
All data based on Dow Jones and Dow Jones/STOXX Indexes, courtesy of Dow Jones & Co.

CBOT and Dow Jones Sticking Together

The Chicago Board of Trade and Dow Jones have renewed their vows, allowing investors to trade futures and options based on Dow Jones indexes until the end of 2007. CBOT introduced Dow Jones indexes futures and options in 1997, and many investors use the contracts to hedge portfolio risk.

Since its inception, the Dow Jones Industrial Average futures contract has traded nearly 16.7 million contracts, and 4.9 million contracts in 2001, an increase of almost 30 % from 2000.