>EXCHANGE TRADED FUNDS: Chronology of ETFs

They first came into existence in the USA in 1993. It took several years for them to attract public interest. But once they did, the volumes took off with a vengeance. Over the last few years more than $120 billion (as on June 2002) is invested in about 230 ETFs. About 60% of trading volumes on the American Stock Exchange are from ETFs. The most popular ETFs are QQQs (Cubes) based on the Nasdaq-100 Index, SPDRs (Spiders) based on the S&P 500 Index, iSHARES based on MSCI Indices and TRAHK (Tracks) based on the Hang Seng Index. The average daily trading volume in QQQ is around 89 million shares.


A key reason for their popularity is their convenience. Since ETFs trade and settle like a stock, there is no additional infrastructure or documentation required. By executing a single ETF transaction, an investor can obtain exposure to broad indices or sectors. For example, if an investor needs exposure to Large Cap Technology, he can obtain this exposure by purchasing the Technology Sector SPDR.

RISH TRADER