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ETF Specialist

Five Surprising ETF Statistics

Digging a little deeper into the data reveals some interesting ETF trends.

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My colleague Karen Dolan wrote a recent article, "You Won't Believe These Numbers," which took a look at some interesting fund statistics that often fly under the radar of most investors. Although fees, tracking error, and performance still dominate the statistical landscape in terms of evaluating which fund to choose for your portfolio, there are plenty of other good statistics in addition to these old standbys that can show some very revealing and surprising trends in the exchange-traded fund universe at large.

33% versus 2.4%
The daily trading volumes in terms of percentage of assets under management for the two large S&P 500 tracking ETFs,  SPDRs (SPY) and  iShares S&P 500 Index (IVV), respectively. In theory, the Spider is turning over its investor base every three days--although in actuality there are plenty of investors holding the fund long term. IVV is clearly the fund of choice among longer-term investors. Don't be fooled by this low trading volume statistic into thinking that IVV is not a liquid ETF. IVV is all grown up, with more than $20 billion in assets and an average trading volume of 3 million shares a day. These statistics are surprising enough in their own right when you realize how much IVV has grown in the past year.

20%, 2nd, and 9th
The first statistic is the premium that  United States Natural Gas (UNG) reached last week. We've been documenting the struggles of this fund over the past several weeks, concluding that as long as UNG was not able to create new shares it was essentially a closed-end fund. We took a look at the 653 U.S. closed-end funds in Morningstar's database to see how UNG compared and found that UNG would be the second-largest closed-end fund in terms of assets and that its 20% premium would have been the ninth-highest in the closed-end fund universe.

Last week, ALPS, the fund provider of UNG, announced that it is again planning to issue shares in exchange for natural gas swaps (as opposed to futures contracts). As a result we have seen a dramatic collapse in the fund's market price premium to its NAV. We still continue to warn that the situation with UNG is still quite fluid and the fund could continue to trade at a premium even with the latest turn of events.

$31.7 billion and $11.4 billion
Those are the respective assets in the two largest broad emerging-markets ETFs,  iShares MSCI Emerging Markets (EEM) and  Vanguard Emerging Markets Stock ETF  (VWO). What's notable about this is that after a late start, VWO is finally gaining ground on EEM. A year ago, EEM was more than 4 times the size of VWO in terms of assets, despite charging 72 bps versus the 27 bps charged by VWO. Although both funds have seen a surge in assets over the past year, EEM is only 2.75 times the size of VWO, showing that investors will vote with their wallets when it comes to such a stark contrast in fees.

It remains to be seen how much longer iShares can keep charging a rate that is more than double what Vanguard charges for a fund that tracks the same index and has ample liquidity. Our prediction is that we will see an EEM fee cut in the next couple of months to bring it in line with the market.

$576.5 million
This is the total assets in  iPath S&P 500 VIX Short-Term Futures ETN (VXX). Since April 2009, this fund has managed to amass significant investor dollars from investors looking for exposure to the exotic volatility tracking VIX index. Even more remarkable is the growth this fund experienced structured as an ETN, as many investors have put ETNs in the penalty box as a result of the widespread trouble in banks. I guess the promise of access to this unique market was enough to get investors over the credit-risk hump.

103% and Negative 61%
These are your year-to-date returns leaders both on the positive and negative sides of the nonleveraged ETF field. Market Vectors Coal ETF  (KOL) has racked up an impressive year-to-date return of 103%, leading all ETFs. Last year was not kind to the coal sector, and, even with the impressive gains this year, KOL still has returned negative 17% since inception in early 2008. The nonleveraged loss leader for the year to date is none other than the much-maligned United States Natural Gas (UNG). Although natural gas prices have reached 10-year lows, this fund has had the added head wind of dealing with steep contango in the natural gas futures curve, further eroding returns. For UNG, I guess when it rains, it pours.


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Disclosure: Morningstar licenses its indexes to certain ETF and ETN providers, including Barclays Global Investors (BGI), Claymore Securities, First Trust, and ELEMENTS, for use in exchange-traded funds and notes. These ETFs and ETNs are not sponsored, issued, or sold by Morningstar. Morningstar does not make any representation regarding the advisability of investing in ETFs or ETNs that are based on Morningstar indexes.

Scott Burns does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.