ETF Industry Headed for Another Record Year

While there are already a handful of ETFs that track commodities, the asset class is still relatively untapped. The first such product, streetTracks Gold Trust (GLD Quote), was launched in November 2004, and not long later Barclays Global Investors introduced iShares Comex Gold Trust (IAU Quote) and iShares Silver Trust (SLV Quote).

More recently there's been talk about the possibility of an ETF that tracks platinum, and while this has not yet panned out, many people expect more ETFs that track individual metals and baskets of commodities to make their way to the market next year.

Fixed-income markets are also relatively untapped by ETFs; there are currently just six products that track bond indices, and all are iShares. Barclays launched the first four in July 2002 and then followed up with two more, one in September 2003 and the other in December 2004.

Trading baskets of bonds poses some problems, including feeding price data to exchanges from multiple sources. But Dodd Kittsley, director of ETF Research at State Street Global Advisors, said many ETF providers are working to overcome the kinks and will likely roll out some new products in 2007.

Among the fixed-income ETFs currently in registration with the SEC are a batch from Ameristock Funds that are based on the U.S. Treasury indices from Ryan ALM. State Street Global Advisors and PowerShares are also said to be developing fixed-income products, among other providers.