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TheStreet Open House

What's in Your Exchange-Traded Fund?

As the undisputed current growth champion of investment vehicles, ETFs offer some very tangible advantages for owners of stocks in the funds' portfolios.

With expense ratios generally only a fraction of those tied to typical open-end mutual funds, ETFs have been steadily attracting new assets, thereby creating additional demand for the stocks they hold. And the more popular ETFs become, the greater their influence on the stocks they hold.

To see how much influence ETFs have, TheStreet.com Ratings took an in-depth look at the holdings of the ETFs we rate, to see which stocks are most commonly held. We also took a look at which stocks had the highest percentage of ETF ownership.

Although it might seem that there would be a lot of crossover between the two lists, that certainly wasn't the case. In fact, there is not a single stock that makes both lists.

The first table shows which stocks are most commonly found in ETFs. It is a veritable who's-who of blue-chip stocks, topped by Exxon Mobil (XOM), General Electric (GE) and Citigroup (C).

This indicates that despite all the newfangled flavors of ETFs that are being cranked out -- such as ETFs based on carbon emissions credits, or nanotech ETFs -- the majority of ETF money is still in the more stable blue-chip stocks. For example, about one-fifth of all ETFs hold Merck (MRK), Microsoft (MSFT) or Johnson & Johnson (JNJ).

Stocks Most Widely Held by ETFs (by Aggregate Value of ETF Holdings)
Name Ticker % of ETFs Owning Mkt. Val. of ETF Holdings ($Mil) % of Shares Held by ETFs
Exxon Mobil XOM 17.3 8,346.6 2.1
General Electric GE 17.3 6,373.5 1.8
Citigroup C 17.9 4,997.8 2.1
Microsoft MSFT 19.6 4,900.8 1.9
AT&T T 17.9 4,366.2 1.9
Bank of America BAC 16.8 4,273.4 1.9
Johnson & Johnson JNJ 20.1 4,138.0 2.4
Pfizer PFE 19.0 4,129.1 2.3
Procter & Gamble PG 18.4 4,037.2 2.1
Altria Group MO 17.9 3,914.5 2.2
Chevron CVX 16.2 3,433.1 2.3
IBM IBM 19.0 3,099.7 2.2
American Intl. Group AIG 17.9 3,098.5 1.8
Cisco Systems CSCO 18.4 2,890.4 1.9
JPMorgan Chase JPM 16.2 2,494.6 1.5
Amgen AMGN 16.8 2,477.3 3.5
Merck MRK 19.6 2,438.7 2.6
Hewlett-Packard HPQ 19.6 2,323.4 2.2
Abbott Laboratories ABT 19.6 2,299.2 2.8
Wal-Mart Stores WMT 15.6 2,295.8 1.2
Source: TheStreet.com Ratings

The second table, which shows the stocks ETFs control the most, is hardly a list of the most stable stocks in the world. Particularly, the first two stocks on the list, Novastar Financial (NFI) and Accredited Home Lenders (LEND), have been bludgeoned by the recent subprime meltdown.

Stocks With Highest Percentage of Outstanding Shares Held by ETFs
Name Ticker % of ETFs Owning Mkt. Val. of ETF Holdings ($Mil) % of Shares Held by ETFs
Novastar Financial NFI 7.3 23.2 17.0
Accredited Home Lenders Holding LEND 7.8 19.2 16.1
Health Management Assn. HMA 15.6 343.6 13.1
Perrigo PRGO 12.3 182.3 12.1
FirstMerit FMER 11.7 194.2 11.6
Parexel Intl. PRXL 11.7 98.9 10.7
Owens & Minor OMI 9.5 144.7 10.6
Universal Corp. Virginia UVV 12.3 152.8 10.4
Diversa DVSA 7.3 33.7 10.4
Nicor GAS 11.7 215.0 10.2
Provident Bankshares PBKS 10.1 106.7 10.2
Maxwell Technologies MXWL 5.0 22.4 10.2
Plug Power PLUG 7.8 24.9 9.8
Essex Property Trust ESS 16.2 304.0 9.8
Black Hills BKH 11.7 118.7 9.8
Vertex Pharmaceuticals VRTX 13.4 342.5 9.6
Camden Property Trust CPT 12.3 379.7 9.5
United Dominion Realty Trust UDR 15.1 385.7 9.4
Inland Real Estate IRC 10.1 109.8 9.4
Healthcare Realty Trust HR 9.5 158.8 9.3
Source: TheSteet.com Ratings

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