Magazine article American Banker

Economy Crimped Exchange-Traded Funds in January

Magazine article American Banker

Economy Crimped Exchange-Traded Funds in January

Article excerpt

Assets held in U.S. exchange-traded funds declined last month because of poor market conditions, not a lack of interest in the product.

These mutual funds, which trade on an exchange like a stock, typically follow an index, but some companies have introduced actively managed products this month in a bid for assets.

Exchange-traded funds have gained popularity in the past few years, because of their low fees and flexible trading. But last month's results proved that not even the most popular products are immune to difficult market conditions.

Total assets held in exchange-traded funds declined 6.58% from a month earlier, to $570 billion as of Jan. 31, according to data compiled by State Street Global Advisors, the Boston investment management arm of State Street Corp.

Assets held in an alternative hedge-like ETF portfolio, leveraged exchange-traded funds, increased 19.2% from December. These short and double-short funds gained popularity among investors seeking to offset losses on their long-term investment vehicles.

Assets rose 13.4% in commodity exchange-traded funds and 8.8% in fixed-income ETF portfolios.

Meanwhile, assets dropped 10.1% in international exchange-traded funds and 10.8% in funds with a market-cap focus, State Street said.

Despite the decline in ETF assets, trading volume increased last month.

January trading volume in exchange-traded funds listed in the United States jumped 236% from a year earlier, to a record $2. …

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