ETF trading volumes rise 34%

GLOBAL – The average daily trading volume of exchange-traded funds rose 34% in the first quarter, though assets under management in Europe were flat.

Average daily volume in ETFs rose 34% in terms of shares traded and 40% by dollar volume, according to a report by Morgan Stanley.

“Assets under management remained virtually unchanged for ETFs listed in Europe and Japan at the end of the first two month of 2003, while US-listed ETF assets under management declined by 9.1% during this period,” the bank said. Total assets under management were 141.6 billion dollars.

Morgan Stanley vice president Deborah Fuhr said there had been a “little bit of a plateau in assets” – which she put down to the poor state of the markets. She pointed to the increase in trading volume and the fact that more people are using ETFs.

The growth in the numbers of ETFs seen in previous years has slowed considerably. Fuhr said: “We’re not in the situation we were two years ago.” And, Fuhr said, the range of possible ETFs is now more or less complete. “By and large we have a very good toolkit that people can use.”

She said that Europe has the potential to add ETFs in the small- and mid-cap area, as well as fixed income. There was still a challenge in explaining how the products work, she said. “There’s a large need to continue to educate people about how they work.”

ETFs are securities that track indices but have the flexibility of trading like a stock.

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