From the March 01, 2012 issue of Futures Magazine • Subscribe!

ETF Guide: Trending in turmoil

Click here for Futures' 2012 ETF Guide.

In 2011, the exchange-traded fund (ETF) industry continued a recovery that brought it out of its first significant contraction since it was created in 1993. However, the surge was muted strongly mid-year as the European debt crisis, and then the MF Global debacle, rippled through the investment industry. The result was that ETF assets ended well off their $1.113 trillion peak set in April, finishing November 2011 at $1.045 trillion — but still about $117.52 billion above November 2010’s total.

According to data from the Investment Company Institute (ICI), a national association that represents U.S. investment companies, that growth was distributed throughout the domestic industry, with broad-based and sector equity funds, international funds and bond funds all increasing in number over 2010’s figures (see “ETF breakdown”). However, international funds did lose assets slightly over the course of the year.

In terms of dollars invested, domestic equity ETFs attracted a large share of the additional billions that flowed into ETFs in 2011, increasing by $87.59 billion from November 2010 to November 2011. Bond ETF assets rose by $36.61 billion to $177.58 billion between November 2010 and November 2011. International ETF funds dipped slightly year-over-year, dropping $6.75 billion to $252.28 billion between November 2010 and November 2011. At the end of November 2011, hybrid funds held a relatively modest $376 million (see “Steady growth”).

In terms of volume reported by the exchanges, activity rose in ETFs during 2011. The average daily volume of the ETFs included in Futures’ 2012 ETF Guide was about 3.76 million units a day in 2011, roughly half a million units a day more than the year before. In 2010, the average daily volume across all ETFs in the Guide was 3.27 million units a day.

Futures’ ETF Guide includes all ETFs that traded more than 300,000 units a day, on average, as the previous year came to a close. Based on data from 2011, 366 ETFs made the cut (out of 1,314 available at the end of the year). In 2010, 342 ETFs were included.

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