Products February 27, 2009

E*Trade Shutters Index Funds

E*Trade Financial Corp. said it is shuttering four index funds, with a total of about $400 million in assets, because the offerings were unable to attract enough assets to be profitable.
Reported by

A news report on the 24/7 Wall Street.com Web site said the company told customers this week of its plans to close the funds as of March 27 and that the offerings would no longer accept new money.

The company said customers who haven’t pulled their money out of the funds by the liquidation date will receive cash equivalents.

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“The E*Trade line has not gained the traction needed to maximize economies of scale,” a company representative said in the news report. “The funds also saw dwindling assets because of the falling market. This decision is not the result of performance.”

The largest of the funds being closed is the E*Trade S&P 500 Index, which has about $230 million in assets. Its other index funds include Russell 2000 (ETRUX), Technology (ETTIX), and International (ETINX).

The Markets February 27, 2009

Sales not Enough to Counter Mutual Fund Losses

The combined assets of the nation's mutual funds decreased by $191 billion, or 2%, to $9.411 trillion in January, according to the Investment Company Institute (ICI).
Reported by

However, market losses were at fault for the decrease, as most fund categories reported sales in excess of redemptions for the month. Long-term funds—stock, bond, and hybrid funds—had a net inflow of $25.35 billion in January, versus an outflow of $29.43 billion in December, ICI data showed.

Stock funds posted an inflow of $9.05 billion in January, compared with an outflow of $20.43 billion in December. Among stock funds, world equity funds (U.S. funds that invest primarily overseas) posted an inflow of $2.19 billion in January, while funds that invest primarily in the U.S. had an inflow of $6.85 billion.

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Bond funds had an inflow of $16.73 billion for the month, compared with an outflow of $7.01 billion in December. Taxable bond funds had an inflow of $12.87 billion and municipal bond funds had an inflow of $3.86 billion.

Money market funds were still the most popular choice for investors—at least for institutional investors—as ICI data showed the funds had an inflow of $59.52 billion in January, on top of the $109.35 billion inflow in December. Funds offered primarily to institutions had an inflow of $67.62 billion, while funds offered primarily to individuals had an outflow of $8.10 billion.

Hybrid funds posted an outflow of $419 million in January, compared with an outflow of $1.99 billion in December.

The ICI data is here.

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