Sail Boat

News Roundup: 2001 ETF Assets, Vanguard Telephone Exchanges, Dow CDs

Sail Boat

Exchange-traded fund assets grew significantly in 2001, according to year-end statistics. Worldwide assets ballooned to $103.2 billion, an increase of 39% from the previous year. On the domestic front, U.S.-based ETF assets jumped 27% from last year to $83.1 billion.

International ETFs saw a 132% increase to over $20.0 billion, and in Europe alone assets increased a whooping 715% to $5.5 billion, from $0.7 billion in 2000.

U.S. Exchange-traded fund Assets
Fund manager
# funds
Assets
Market share 2001
Market share 2000
State Street
21
$37.4 billion
45.0%
46.7%
Bank of NY
2
$26.9 billion
32.3%
41.9%
77
$17.7 billion
21.3%
11.4%
1*
$1.2 billion
1.4%
0.0%
Totals:
101
$83.1 billion
100.0%
100.0%

*Vanguard has since launched an Extended Market VIPERs         Source: State Street

International Exchange-traded fund Assets
Fund manager
# funds
Assets
Market share 2001
Nomura Asset Mgmt.
2
$5,048,264,123
25.1%
State Street
17
$4,115,417,180
20.5%
Barclays Global
27
$3,899,105,074
19.4%
IndexChange
16
$1,278,434,323
6.4%
Merrill Lynch LDRs
15
$1,227,528,009
6.1%
Societe Generale
4
$994,270,966
4.9%
Daiwa Asset Mgmt.
2
$743,891,177
3.7%
Credit Suisse
1
$580,688,062
2.9%
Nikko Asset Mgmt.
1
$545,137,776
2.7%
Ofek Leumi
1
$516,526,777
2.6%
TD Securities
4
$355,916,027
1.8%
IndexCO
1
$319,694,935
1.6%
AXA Gestion
3
$185,804,690
0.9%
UBS Asset Mgmt.
6
$181,338,208
0.9%
OM Group
1
$103,420,552
0.5%
Totals:
101
$20,095,437,882
100.0%

*Source: State Street Global Advisors

The latest international ETF, the TOPIX Index Fund, trades on the Tokyo Stock Exchange and is tied to the broad TOPIX index. The fund, which is managed by Nikko Asset Management, has an expense ratio of 0.11% and was launched on January 9.

Reach out and touch Vanguard

The Vanguard Group announced that its legions of retail index fund investors will soon be able to execute fund share exchanges over the telephone or online. Currently, the Valley Forge-based fund shop mandates that exchanges for domestic funds must be submitted in writing. In all, 20 Vanguard funds will adopt the new exchange privilege.

To prevent market-timing and shareholder turnover in its index funds, Vanguard will impose limits on how frequently shareholders can telephone or online exchange out of a fund.

"We're confident that the stringent policy, coupled with the comprehensive trading activity controls and intra-day cash flow reporting that we've developed, will enable us to manage the portfolios in the same highly efficient manner as in the past and to match our benchmarks with a high degree of precision," said Gus Sauter, who manages several Vanguard funds, including the behemoth Vanguard 500 index fund.

Vanguard said that it will still accept written exchange requests, but that telephone and online exchanges have the potential to cut costs for all fund shareholders.

Dow CDs for the masses

Certificates of deposits (CDs) with a rate of return linked to the performance of the Dow Jones Industrial Average will soon be available to bank customers across the country. The Dow CDs, which are FDIC-insured, will be available to more than 9,211 community banks and savings and loan associations nationwide.

"This is an important step in our continuing effort to put the blue-chip Dow Jones Industrial Average and the entire family of Dow Jones indexes to work for individual investors and financial institutions," said Michael A. Petronella, managing director of Dow Jones Indexes, in a statement.