This Week In ETFs: September 3rd Edition

by on September 3, 2010

In what is traditionally one of the slowest weeks of the year on Wall Street, U.S. stocks looked poised to snap an extended losing streak after an impressive showing from the private sector jobs report boosted investor optimism. Aside from the calendar change, this week saw plenty of major events, including President Obama marking a new stage in the Iraq war, the European Central Bank’s decision to hold interest rates at 1%, and of course the all-important government jobs report.

It was another busy week in the ETF industry as well, with a number of new funds hitting the market and the final tally from August showing cash outflows for the first time since January. Below, we highlight three of the best ETF stories from around the Web during the last week:

New ETF Seeding Models Elusive at Index Universe

In a fascinating article Olivier Ludwig outlines how an ETF is born, detailing what goes into creating a new fund. Unfortunately, it has become harder and harder to launch new ETFs in the current environment; Ludwig goes into detail about the specific problems that new funds face, and why so many are having trouble gaining traction among investors.

Adviser Shift Expected To Boost ETF Sales at The Wall Street Journal

The next wave of growth in the ETF industry may be upon us, according to WSJ columnist Daisy Maxey. Fee-based financial advisers have begun embracing exchange-traded products, a development that could spur huge inflows into the industry in coming months.” As regulators tighten up on potential conflicts of interest in the brokerage and advisory industry, more advisers are expected to move toward business models based on fees from clients rather than sales commissions on products,” writes Maxey. Driving the switch from mutual funds are proposed changes that would limit and make more transparent the 12b-1 fees that help to pay advisers.

How UNG Lost 23% In August at ETF Database

UNG, one of the most highly traded ETFs on the market, has been riddled with losses ever since its inception in early 2007. The fund has been on a slippery slope for years, losing nearly 90% of its value over its three year life. But even by UNG’s standards, August was a particularly bad month. In this article, we explore how a fund with more than $2 billion in assets managed to lose nearly 1% for every trading day in August.

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Disclosure: No positions at time of writing.