Exchange Traded Commodities Make Headway in Financial Markets
BOSTON -- After a slow start following their launch in 1993, exchange traded funds grew significantly in the late 1990s due in large part from institutional investor demand, according to Aite Group.
During the 2001-2002 recession, ETFs saw another slowdown only to pick up again in 2004 prompted by a wider array of investors including institutions, hedge funds, individuals and advisors, Aite reports in a newly-released primer on ETFs and exchange traded commodities.
Described as open-ended securities created by using multiple types of structures including trusts, partnerships or structured notes, ETCs are backed by underlying assets such as indexes, futures or physicals and are accessible to anyone with a broker, Aite noted in a newly released primer. Exchange traded commodities have grown to $36 billion and are expected to swell to $247.8 billion by 2012, according to Aite. To keep up with the demand, issuers grew their product lineup and offered various investment approaches involving shorting and leverage.
Aite reports that the first actively traded ETFs became available this quarter in the United States through Bear Stearns, now owned by JPMorgan and PowerShares, among others.
The overall ETF market now has more than 700 funds with approximately $700 billion in assets. There are 504 publicly filed ETFs pending and by some estimates over 1,000 privately filed ETF registration requests, according to Aite.