The combined assets of exchange-traded funds listed on U.S. exchanges rose $11.13 billion, or 3.3%, to $348.05 billion in August, the Investment Company Institute reported Wednesday. Assets in domestic-stock ETFs rose to $241.21 billion in August from $233.93 billion the previous month, while funds investing in international companies rose to $87.93 billion from $84.82 billion. During August, the value of all ETF shares issued exceeded that of shares redeemed by $3.71 billion, according to ICI, the main trade group for the mutual fund business.

TF Securities, a developer of exchange-traded products, will launch 29 new funds on Wednesday that it hopes will attract investors looking to access commodity markets, the company said on Tuesday.

ETF Securities will launch 19 individual securities and 10 index securities that will allow investors to trade in individual commodities or a focused index.

The products will be traded on the London Stock Exchange.

At the same time, the LSE said it will launch a new market segment for ETCs.

The market segment, the first of its kind in the world, will contain 32 exchange traded commodities and commodity indices, including the 29 to be issued by ETF Securities.

"Nobody has ever launched 29 products in one go. We are giving investors full access to an asset class to which they have been unable to gain exposure to date," Hector McNeil, head of sales and marketing at ETF Securities, said.

"We have had huge interest from institutional investors, hedge funds and a lot of private wealth," he added.

Exchange-traded funds allow investors to gain exposure to commodity markets, which have stormed to record highs in many cases over the past three years, without having to worry about setting up futures trading accounts or taking physical delivery of products.

ETF Securities' 19 exchange-traded commodities (ETCs) range from copper and aluminium to crude oil and gasoline and also include agricultural commodities, including live cattle, sugar and wheat.

The index products include a cross-commodity product, base and precious metals baskets and energy.

McNeil said the products tracked the Dow Jones AIG indices, which in turn were based on London Metal Exchange prices for base metals other than copper and U.S. futures markets for everything else.

ETF Securities launched a physically-backed gold fund about 2-1/2 years ago that has attracted $1.6 billion (840 million pounds) in investment.

An oil index launched a year ago has about $150 million invested in it and more products may be in the pipeline.

iShares Dow Jones US Home Construction (ITB)

Last Trade:	37.12
Trade Time:	3:56PM ET
Change:	0.63 (1.73%

The investment seeks results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Home Construction index. The index measures the performance of the home construction sector of the U.S. equity market. The index includes companies that are constructors of residential homes, including manufacturers of mobile and prefabricated homes. The companies selected for inclusion in the index must meet minimum market capitalization and liquidity requirements. The fund uses a representative sampling strategy to try to track the index. It is nondiversified.

streetTRACKS Gold Shares (GLD)

Last Trade:	58.50
Trade Time:	4:15PM ET
Change:	0.55 (0.95%)

streetTRACKS Gold Trust is an investment trust whose shares strive to reflect the performance of the price of gold bullion, less the Trust’s expenses. The Trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemptions of baskets. The gold held by the trust will only be sold on an as-needed basis to pay trust expenses, in the event the Trust terminates and liquidates its assets, or as otherwise required by law or regulation. The Trust is not managed like an active investment vehicle, and it's not registered as an investment company under the Investment Company Act of 1940.
Telecom HOLDRs (TTH)

Last Trade:	33.27
Trade Time:	3:59PM ET
Change:	0.36 (1.09%)

The investment seeks growth. Telecom HOLDRS are Depositary Receipts issued by the Telecom HOLDRS Trust which represent an undivided beneficial ownership in the common stock of a group of companies that are involved in various segments of the Telecommunications Industry.

Investment companies are throwing a barrage of exchange-traded fund products on the U.S. market, taking what were originally index products based on fairly broad sections of the stock market and slicing them into smaller pieces.

At the end of 2005 there were 201 ETFs with $296 billion in assets, representing a 31 percent increase in assets for the year, according to the Investment Company Institute, a trade group for the U.S. fund industry. By the end of July, the number of ETFs rose to 268 and assets were $337 billion.

Trading in 10 PowerShares FTSE RAFI fundamental indexes started on the Nasdaq on Wednesday. Nine of the ETFs track industry sectors such as consumer goods and one is based on an index of small and mid-cap stocks.

All use what PowerShares Capital Management President and Chief Executive Bruce Bond calls a "fundamentally weighted approach" to indexing, unlike more traditional indexes. A company's weighting in the index depends on sales, cash flow, book value and the dividend if they have one, Bond said.

On Thursday, Claymore Securities Inc. is launching five ETFs on the Amex. One is the Claymore/Sabrient Insider ETF, which Claymore says selects stocks based on public reports of insider buying. The ETF also buys stocks which have received upgrades from Wall Street analysts.

Unlike the more familiar open-end mutual funds, which generally are priced once a day at the end or the day, ETFs trade continuously on exchanges.

The first U.S. ETF was the S&P 500 SPDR , which debuted on the American Stock Exchange in 1993. More recently, other exchanges have been getting into the act as the popularity of ETFs has grown.

The Nasdaq stock market now lists 18 ETFs and the New York Stock Exchange listed 37 ETFs via initial public offerings so far this year.

"They are better tax vehicles than mutual funds," said William Breen, manager of the Symphony Wealth Management Ovation Fund , which was started to invest in ETFs.

An investor who buys an open-end mutual fund late in the year may be buying into some built-in capital gains that will be taxable. With the ETF, there is no capital gains tax until it is sold, assuming it is sold at a profit.

Although Breen, an emeritus professor of finance at the Kellogg Graduate School of Management at Northwestern University, is clearly a proponent of ETFs, he nevertheless raises some cautionary notes about the proliferation of product.

He notes that some of the ETFs use indexes that were invented just for the ETF and thus have no history. Others, which rebalance periodically such as the end of each quarter, require a bit of effort for an investor to stay on top of what exactly the ETF owns, Breen said.

He also notes that there are a few with a heavy concentration in one or a few stocks.

"The ETF world has been primarily focused on splitting up the universe into ever smaller pieces," said David Cohen, managing director at Claymore. He said the five new Claymore products offer five distinct strategies for investors.

Another of the five, the Claymore/BNY BRIC ETF, is billed as the first U.S. ETF to focus on the economies of Brazil, Russia, India and China.

Although the majority of ETFs are based on stock indexes, there are also ETFs for fixed income and for commodities.

Claymore Securities is a private firm based in Lisle, Illinois. PowerShares became part of Anglo-U.S. fund firm Amvescap through a merger that was completed on Monday.

The American Stock Exchange will launch trading in options on Thursday, September 21, 2006 on the following exchange traded funds by Claymore Securities, Inc. (Claymore):

* Claymore/BNY BRIC ETF (Amex EEB)

* Claymore/Sabrient Insider ETF (Amex NFO)

* Claymore/Sabrient Stealth ETF (Amex STH)

* Claymore/Zacks Sector Rotation ETF (Amex: (XRO)

* Claymore/Zacks Yield Hog ETF (Amex CVY)

Claymore/BNY BRIC ETF options will open with strike prices of a range (20 - 30 1 pt increments) and position limits of 2,500,000 shares. The options will trade on the March expiration cycle. The Specialist will be Susquehanna Investment Group. Claymore/BNY BRIC fund seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an equity index called the BNY BRIC Index.

Claymore/Sabrient Insider ETF options will open with strike prices of a range of (20 - 30 1 pt increments) and position limits of 2,500,000 shares. The options will trade on the March expiration cycle. The Specialist will be Jane Street Specialist, LLC. Claymore/Sabrient Insider fund seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an equity index called the Sabrient Insider Sentiment Index.

Claymore/Sabrient Stealth ETF options will open with strike prices of a range (20 - 30 1 pt increments) and position limits of 2,500,000 shares. The options will trade on the March expiration cycle. The Specialist will be Jane Street Specialists, LLC. Claymore/Sabrient Stealth fund seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an equity index called the Sabrient Stealth Index.

Claymore/Zacks Sector Rotation ETF options will open with strike prices of a range (20 - 30 1 pt increments) and position limits of 2,500,000 shares. The options will trade on the March expiration cycle. The Specialist will be AGS Specialists, LLC. Claymore/Zacks Sector Rotation fund seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an equity index called the Zacks Sector Rotation Index.

Claymore/Zacks Yield Hog ETF options will open with strike prices of a range (20 - 30 1 pt increments) and position limits of 2,500,000 shares. The options will trade on the March expiration cycle. The Specialist will be AGS Specialists, LLC. Claymore/Zacks Yield Hog fund seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an equity index called the Zacks Yield Hog Index.

The American Stock Exchange® (Amex®) is the only primary exchange that offers trading across a full range of equities, options and exchange traded funds (ETFs), including structured products and HOLDRS(SM). In addition to its role as a national equities market, the Amex is the pioneer of the ETF, responsible for bringing the first domestic product to market in 1993. Leading the industry in ETF listings, the Amex lists 191 ETFs. The Amex is also one of the largest options exchanges in the U.S., trading options on broad-based and sector indexes as well as domestic and foreign stocks.

US SEC staff eyes streamlining reviews of new ETFs

U.S. market regulators are moving toward faster, streamlined reviews of proposals for new exchange-traded funds, a top official said on Wednesday.

"We are currently in the midst of a concerted effort to evaluate and improve our process for reviewing ETF proposals," said Andrew Donohue, director of the Division of Investment Management at the Securities and Exchange Commission.

Exchange-traded funds are a hot investment vehicle that debuted in the early 1990s. Today, there are more than 260 of them. ETF assets under management total about $337 billion.

ETFs are capital pools similar to mutual funds. But unlike the familiar open-ended mutual fund, which typically prices its shares just once daily, shares in an exchange-traded fund trade and reprice continuously all day on an exchange.

The first ETF was the S&P 500 SPDR , which debuted on the American Stock Exchange in 1993.

The SEC has been criticized in some quarters for being too slow in approving the launch of new ETFs, Donohue said in a speech at a conference of ETF and indexed investing managers.

"Our review process should become more streamlined, particularly in terms of our analysis of the underlying markets upon which the ETFs are based," Donohue said.

An investment adviser wishing to introduce a new ETF must now apply to the SEC seeking certain legal exemptions. The SEC can grant the exemptions only after a thorough review of issues such as public interest and investor protection.

"The application process historically has been a time-consuming one," Donohue said.

As interest in ETFs has grown, proposals to launch new ones have poured into the SEC, creating a backlog.

As a result, Donohue said a streamlined review is being eyed for proposals that are similar to existing index-based ETFs. Streamlining could include reducing staff scrutiny of the underlying securities markets, he said.

The SEC staff is also considering permitting ETF sponsors to introduce similar ETFs without going through the exemptive applications process a second time, he said.

In addition, the staff is looking at developing a rule proposal for ETFs that would let them come to market without having to first obtain an exemptive order.

"The number of new, routine, index-based ETF applications submitted this year has convinced us that there is value in focusing our limited resources on developing a proposal for an ETF exemptive rule," he said.

Donohue was named director of the SEC's investment management division in April. He was formerly general counsel at Merrill Lynch Investment Managers, a unit of Merrill Lynch . He was also a member of the board of governors of the Investment Company Institute, a mutual fund industry group.

Investment companies are throwing a barrage of exchange-traded fund products on the U.S. market, taking what were originally index products based on fairly broad sections of the stock market and slicing them into smaller pieces.

At the end of 2005 there were 201 ETFs with $296 billion in assets, representing a 31 percent increase in assets for the year, according to the Investment Company Institute, a trade group for the U.S. fund industry. By the end of July, the number of ETFs rose to 268 and assets were $337 billion.

Trading in 10 PowerShares FTSE RAFI fundamental indexes started on the Nasdaq on Wednesday. Nine of the ETFs track industry sectors such as consumer goods and one is based on an index of small and mid-cap stocks.

All use what PowerShares Capital Management President and Chief Executive Bruce Bond calls a "fundamentally weighted approach" to indexing, unlike more traditional indexes. A company's weighting in the index depends on sales, cash flow, book value and the dividend if they have one, Bond said.

On Thursday, Claymore Securities Inc. is launching five ETFs on the Amex. One is the Claymore/Sabrient Insider ETF, which Claymore says selects stocks based on public reports of insider buying. The ETF also buys stocks which have received upgrades from Wall Street analysts.

Unlike the more familiar open-end mutual funds, which generally are priced once a day at the end or the day, ETFs trade continuously on exchanges.

The first U.S. ETF was the S&P 500 SPDR , which debuted on the American Stock Exchange in 1993. More recently, other exchanges have been getting into the act as the popularity of ETFs has grown.

The Nasdaq stock market now lists 18 ETFs and the New York Stock Exchange listed 37 ETFs via initial public offerings so far this year.

"They are better tax vehicles than mutual funds," said William Breen, manager of the Symphony Wealth Management Ovation Fund , which was started to invest in ETFs.

An investor who buys an open-end mutual fund late in the year may be buying into some built-in capital gains that will be taxable. With the ETF, there is no capital gains tax until it is sold, assuming it is sold at a profit.

Although Breen, an emeritus professor of finance at the Kellogg Graduate School of Management at Northwestern University, is clearly a proponent of ETFs, he nevertheless raises some cautionary notes about the proliferation of product.

He notes that some of the ETFs use indexes that were invented just for the ETF and thus have no history. Others, which rebalance periodically such as the end of each quarter, require a bit of effort for an investor to stay on top of what exactly the ETF owns, Breen said.

He also notes that there are a few with a heavy concentration in one or a few stocks.

"The ETF world has been primarily focused on splitting up the universe into ever smaller pieces," said David Cohen, managing director at Claymore. He said the five new Claymore products offer five distinct strategies for investors.

Another of the five, the Claymore/BNY BRIC ETF, is billed as the first U.S. ETF to focus on the economies of Brazil, Russia, India and China.

Although the majority of ETFs are based on stock indexes, there are also ETFs for fixed income and for commodities.

Claymore Securities is a private firm based in Lisle, Illinois. PowerShares became part of Anglo-U.S. fund firm Amvescap through a merger that was completed on Monday.

Is it possible to build a better index? A handful of contenders are trying.

With broad indexes usually beating actively managed mutual funds, investors have turned to exchange traded funds, or ETFs, which generally charge low fees and seek to mirror the return of a particular index, as a cheap way to get winning returns. A few of the ETFs have become behemoths. For instance, Spyders, which mimic the Standard & Poor's 500, has a market capitalization of about $57 billion.

A booming market

The market for ETFs has boomed in the last 10 years, growing from $1.05 billion in 1995 to $296 billion in 2005, according to the Investment Company Institute, the mutual fund industry's trade group.

Who wouldn't want a piece of this business?

Hopefuls are crowding in with the new indexes they've built. They range in size from Capital Markets Index, which bills itself as "the first and only measure of the total value of U.S. capital markets" including "all investment grade U.S. stocks, bonds and money market investments, and the actual asset allocation among them." The index, which does not yet trade as an ETF, was launched in May on the American Stock Exchange and includes approximately 2,500 securities.

Then there are the fundamental indexes, where two companies are making the biggest push. In capitalization-weighted indexes, like the Standard & Poor's 500, the greater the company's market capitalization, the greater its weight in the index. In fundamental indexing, the indexes' creators come up with another formula, which gives more weight to a company's financial performance than its stock price.

The emphasis on stock price in most indexes is "how a stock like Google can become the 20th largest position in the S&P 500 even though its current revenue, earnings and book value wouldn't even place it among America's top 200 companies," the July issue of "The No-Load Fund Investor" explained.

In fundamental indexing, the indexes' creators came up with another formula.

Premium on dividends

Wisdom Tree Investments, which introduced 20 fundamentally weighted ETFs in June, weights its indexes on stocks' dividends paid. Its aim is "to passively outperform traditional benchmarks," said Bruce Lavine, the company's president and chief operating officer.

The company's ETFs, which trade on the New York Stock Exchange, have attracted more than $400 million in assets in their first seven weeks of trading, according to the company. Part of the attraction may be its board, which includes Professor Jeremy Siegel of the University of Pennsylvania's Wharton School, and billionaire former hedge fund manager Michael Steinhardt, who is now retired. Another part of the ETFs' attraction may be their costs, which are low, ranging from 0.28 percent to 0.38 percent on its domestic funds.

The other big player in fundamental indexing is Research Affiliates LLC. Its indexes weight companies according to earnings, revenue, dividends and book value. Book value is a company's assets minus its liabilities.

"If stocks differ from their unknowable true fair value — as they must! — and if prices revert in the very long run toward that true fair value, then any weighting scheme that directly links portfolio weight to this pricing error — as cap-weighting does! — will have a return drag," Rob Arnott, chairman of Research Affiliates wrote in an e-mail.

"Such indexes will structurally and unavoidably overweight the overvalued and underweight the undervalued," he said.

Value over growth

The No-Load Fund Investor newsletter agreed, saying the PowerShares FTSE RAFI US 1,000 Portfolio (ticker PRF), which uses Research Affiliates' methodology, is "the most attractive fundamental-indexing product available to investors today," partly because it gives value stocks a greater weight than growth stocks, giving investors more exposure to the value stocks' stronger returns. The newsletter did, however, criticize the fund for its 0.60 percent expense ratio, which Arnott said will fall if the ETF becomes larger.

Sounds great. Why might investors hesitate? One thing that might give you pause is just how new the indexes are. While ETFs from both Wisdom Tree and Research Affiliates point to back-tested data to say what investors' returns would have been if they had used the companies' methodology in the past, that may not be as reassuring as actual historic data.

That historic data is starting to trickle in. Said Luciano Siracusano, the director of research at WisdomTree, "There's approximately two months of real-time data on the indexes. The performance, over that period, has been very, very compelling."