TrimTabs Investment Research

ETFs Rake In Record Investments in 2004

By Aleksandra Todorova
www.SmartMoney.com
January 3, 2005

RECORD-HIGH INVESTMENTS poured into equity exchange-traded funds in 2004, closing the year with a $54.4 billion inflow. This is more than three times the $15.1 billion in net issuance of equity ETFs in 2003.

"[ETFs] are definitely taking market share away from the more traditional mutual funds," said Charles Biderman, president of TrimTabs Investment Research, an independent research firm that tracks investments. "What we're seeing is investors who know what they want to buy are switching to ETFs. Pension and 401(k) plans are increasingly using ETFs as well."

Global and international ETFs were most popular last year, mainly due to the weak dollar, according to Biderman. They took in $15.9 billion, better than double year-earlier assets. Investments in domestic equity ETFs totaled $38.5 billion, a 30% increase from 2003.

In the small-cap category, iShares Russell 2000 Index (IWM1) issued $2.2 billion in new shares, almost 50% of assets, according to TrimTabs. iShares S&P SmallCap 600 Index (IJR2) took in $1.7 billion (85%). The Nasdaq-100 Trust (QQQQ3), however, redeemed $3 billion in shares, or almost 13% of assets.

In the domestic growth category, the SPDR Trust (SPY4), which tracks the S&P 500 index, had the largest inflow ($7.7 billion, 17% of year-ago assets), followed by iShares Dow Jones Select Dividend (DVY5), with $3.9 billion.

The leader in international funds was iShares MSCI EAFE Index (EFA6) with $6.8 billion, or 125% of earlier assets, followed by iShares MSCI Japan Index (EWJ7) with $3.3 billion (120%) and iShares MSCI Emerging Markets Index (EEM8) with $2.3 billion (225%). iShares MSCI Canada Index (EWC9) lost $78 million (25%), according to TrimTabs.

ETFs take in $3 billion in latest week

BOSTON (CBS.MW) -- U.S. exchange-traded funds saw a torrent of cash on Friday for the second straight week, taking in $1.1 billion to cap off a $3 billion inflow for the week, according to data from TrimTabs Investment Research.

Last week represented the third-highest weekly total of the year after a $4.7 billion inflow in late June and a $3.6 tally in late November. In the previous week, inflows totaled $774 million.

More speculative growth ETFs lagged the pack, with the $22 billion Nasdaq-100 Cubes (QQQQ) barely managing net inflows for the week. The tech-heavy Cubes were down 0.6 percent for the week ending Dec. 10.

U.S. small-cap and international funds took the lion's share of new investor cash "despite noticeably lagging in performance," TrimTabs said.

The small-cap iShares Russell 2000 Index (IWM) was down 1.5 percent for the week, while the broad international iShares MSCI EAFE (Europe Australia Far East) lost 2.7 percent. The S&P 500 SPDRs (SPY) shed 0.2 percent over the same period.

Certain sectors fell out of favor with ETF investors, as they pulled $179 million from utilities funds and $115 million from ETFs investing in financials stocks. Almost all of these sector withdrawals were shouldered by two funds in State Street Global Advisors' stable of industry-specific ETFs: Utilities Select Sector SPDRs (XLU) and Financial Select Sector SPDRs (XLF).

Utilities SPDRs were down 0.1 percent last week, while Financial SPDRs were essentially flat. Among individual ETFs, the iShares FTSE/Xinhua China 25 Index (FXI) and the iShares Dow Jones U.S. Real Estate (IYR) both increased assets by about 25 percent.

The China ETF lost 4.3 percent for the week ended Dec. 10, and the real estate iShare gained 1 percent. The brand-new StreetTracks Gold Trust (GLD) lost 12 percent of its assets due to investor outflows as the price of gold retreated last week after hitting 16-year highs. The gold ETF was down 4 percent for the week, TrimTabs reported.

TrimTabs Starts Tracking Investment Flows to ETFs

Wed Nov 10, 2004 03:09 PM ET NEW YORK, Nov 10 (Reuters) - TrimTabs Investment Research, which publishes data on the flow of investment in the U.S. stock market, said on Wednesday it has launched a product that tracks the daily issuance of all exchange-traded funds.

Charles Biderman, president of the Santa Rosa, California company, said the new product will improve the study of stock market investment flows, and what investors are doing.

ETFs have experienced tremendous growth, with more than $30 billion in new assets entering the product in the first nine months of the year, according to Morgan Stanley.

During the first week of November, U.S. equity ETFs posted inflows of $2.4 billion, compared with monthly flows of $3.4 billion in October and $2.6 billion in September, TrimTabs said.

That investment surge continues, with $1.8 billion entering ETFs on Monday and Tuesday of this week, Biderman said in a telephone interview.

"Pension funds have waited until after the election" to make their investment decisions," he said. "That's what it looks like," he said.

The flow of investment data can help investors understand where the money is going, he said.

Biderman said a TrimTabs model portfolio is up 15 percent year to date, and 110 percent since the end of 2000, predicting what the market will do based on investment flows.