BUSINESSExchange-traded fund popularity surgesPersonal Finance. By Katherine Vogt, amednews staff. June 14, 2004. In an industry prone to uninspiring jargon, investments with names such as Spiders, Diamonds and Vipers are bound to catch some attention. But artful naming alone can't explain the surging popularity of these and other exchange-traded funds, a type of investment that has existed for a decade and has now matured into a popular vehicle for putting money in the stock market. In a nutshell, exchange-traded funds (ETFs) are mutual funds that hold baskets of stocks designed to track various market indexes. But unlike traditional open-end mutual funds, these funds trade on exchanges throughout the day, like stocks. The first ETF -- Spiders, based on the S&P 500 index -- debuted in 1993, with the second arriving in 1995 and more than a dozen trading by 1996. By the end of 2002, there were 113 ETFs trading with assets worth $102.1 billion, according to the Investment Company Institute, a national investment company association. By April of this year, the combined assets of the nation's ETFs were $162 billion with 134 funds. "In the last five years there has been an explosion of them," said Marvin Appel, MD, chief executive of the Great Neck, N.Y., investment advisory firm Appel Asset Management Corp. "The initial appeal of these was to individual investors who would have otherwise been trading individual stocks. And then some of the more popular ETFs found favor among institutions." Dr. Appel, an anesthesiologist turned investment adviser, said ETFs could be an appropriate investment tool for some physicians. [...]Full text of American Medical News content is available to AMA members and paid subscribers.
Copyright 2004 American Medical Association. All rights reserved.
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