Amex plans new ETF product

The American Stock Exchange (Amex) is working towards providing actively managed exchange-traded funds (ETF) without fully disclosing fund holdings, said Tony Baker, managing director of ETF Marketplace, Amex's ETF division.

"We are very excited about the potential for actively managed ETFs wherein the manager does not have to disclose holdings,” said Baker at a roundtable discussion on ETFs in New York. Amex is currently in discussions with a number of fund companies, which if interested would need to file with the Securities and Exchange Commission for approval.

Meanwhile, another speaker at the event, Kathleen Moriarty, of New York-based law firm Carter Ledyard & Milburn, predicted continued growth for the ETF market. "Currently, ETFs are limited to the equity fund universe along with a relatively few fixed-income products," she said. Demand for a larger landscape of funds, including actively managed ETFs, will spur growth as investors make greater use of the products for asset allocation and other purposes, Moriarty added.

ETFs are single securities that track an index or replicate the performance of a basket of stocks or bonds, and are traded on an exchange. According to the Investment Company Institute, ETF assets reached $162 billion in April 2004. The Financial Research Corporation predicts total ETF assets will reach between $500 billion and $1 trillion by 2007.

The most active ETFs in mid-day trading on Amex included the Nasdaq-100 Index Tracking Stock with 30,322,400 shares traded, SPDRS with 13,029,100, Diamonds at 2,344,400 shares, iShares Russell 2000 with 1,804,800 and iShares MSCI-Japan reaching 1,747,900 shares.