ETF Assets Drop Slightly in First Half of 2010, SSgA Says

(July 30, 2010) — According to a midyear release by State Street Global Advisors (SSgA), exchange-traded fund (ETF) industry assets in the US fell 0.4% to $772 billion in the first half of 2010, yet net flows into all US ETFs during the first six months of the year exceeded the pace seen for the same period last year.

“Despite the market’s performance during the first half of 2010, ETF net inflows are ahead of last year’s pace,” said Tom Anderson, director of strategy and research for the Intermediary Business Group at SSgA, the investment management business of State Street Corporation. “This growth has been driven by financial professionals, individual investors and institutions, and underscores the way investors build and maintain portfolios in every market cycle using these innovative investment products.”

SSgA noted that three key trends have shaped the industry in the first half of 2010.

1. The growing number of fixed-income ETF offerings helped attract net inflows of $21.2 billion for the fixed-income ETF segment, a 21% hike from the end of 2009, illustrating the “rapid evolution” of the ETF industry to meet investor needs.

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2. Gold ETF assets have reached new peaks, jumping 30.2% from the end of 2009, as SPDR Gold Shares ETF earned $7.6 billion, which brought total assets past the $50 billion mark. Investors are no longer simply looking for broad-based commodities, and are instead looking for a specific gold niche, SSgA told ai5000. The SPIDER Gold Trust (GLD), the second-largest ETF in the world, has assets of over $50 billion as of the end of June.

“Gold is a huge opportunity right now as institutions become more heavily invested in the asset,” Will Rhind of ETF Securities told ai5000. “ETFs are a breakthrough solution to get that exposure,” he said, noting that they’ve been increasingly used to position against rising interest rates and fears of inflation.

3. With ETFs accounting for more than 60% of all canceled trades during the market disruption on May 6 known as the “flash crash,” preliminary findings showed the flash crash was caused by market structural issues and were not caused or exacerbated by ETFs or ETF trading. Confidence in these investment vehicles remained strong, said SSgA.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

From ai5000 Magazine: The Fires by Joe Flood

In a testament to ai5000 Editor-in-Chief Kip McDaniel's judgment of talent (or luck, as some see it), ai5000 book reviewer Sara Nelson critiques ai5000 Editor-at-Large Joe Flood's The Fires -- his first (of what we hope is many) non-fiction novel.

It may seem politically incorrect to say so, but one of the (very) few positives to come out of the terrorist attacks on New York City on September 11, 2001, was the improved stature, in the minds of citizens and government alike, of the city’s firefighters. Those of us who witnessed or survived that period remember it as one in which firemen (and, surprisingly rarely, women) were lauded both publicly and privately. It was not uncommon for locals to leave notes and flowers near firehouses that had lost people that day, or for those who had behaved heroically and survived. For months after the attacks, average citizens would go to restaurants and, seeing a table full of rescue workers (many of them from the firehouses) nearby, promptly pick up their check. Firemen were the new, and maybe the only, heroes of that era, a time in which government and corporations seemed to fail us, when the individual act of bravery was the only one we could count on.

However, it was not ever thus, certainly not in New York City—as Joe Flood’s magnificent The Fires makes clear. Gotham in the late 1960s and early 1970s was an economic and social ruin. Crime was rampant, the city was broke: Every New Yorker remembers the headline about President Gerald Ford telling the city to “drop dead,” before eventually giving the almost-in-default state government funds. Something had to be done, and the wisdom of the age suggested that that “something” should be a modern, futuristic, examination of the city’s situation. Enter the RAND Corporation, an outfit known for its computer-generated analyses and its success in high-level military operations, even in the just completed war. (Talk about the military industrial complex!) Surely there was a system, an algorithm, a plan that could be implemented to save the city.

To read the rest of the magazine article, click here.