American Stock Exchange

reported Thursday that its exchange-traded funds saw $70.3 billion in total invested assets in 2000, up from $35.9 billion at the end of 1999. Making up the lion's share of the ETF market were two offerings: The

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S&P 500 SPDR and the

(QQQ) - Get Invesco QQQ Trust Report

Nasdaq-100 Index Tracking Stock.

The S&P 500 SPDR saw a total of roughly $25.5 billion in net assets in 2000, while the Nasdaq 100 Index, commonly referred to by its ticker symbol, had around $23.6 billion assets by the end of the year. Together, the two represented almost 70% of Amex's listed exchange-traded fund marketplace.

Total consolidated average daily trading volume of Amex-listed exchange-traded funds and HOLDRs reached 45.8 million shares a day last year, up from 19.4 million shares a day during the previous year. That volume was also dominated by the QQQ, which saw average daily trading volume of around 27.7 million shares a day, or roughly 60% of the total trading volume. The S&P 500 SPDR was a distant second, with about 7.7 million shares a day, or 17% of the total volume.

The dominance of these two exchange-traded funds in 2000 leads many to believe that there won't be as many new products launched in 2001 as in 2000. That's because the market is not only maturing and will slow like any other maturing market, but also because there simply might not be a need for a deluge of new exchange-traded vehicles.

"The trend seems to be that the ones that got there first are the ones that people are sticking with," says


analyst Christopher Traulsen. "Among the newer ones, they cut and dice so finely that I can't imagine there's a market for all of those and maybe we'll see them shake out as we go forward."

Market watchers say the dominance of the QQQ reflects both the popularity and the volatility that the technology sector has gone through in the past year.

"What this tells me is that clearly it was an active year for technology trading," says Traulsen. "People were trading like wildfire and it led to a lot of volume in the cubes."

Exchange-traded funds differ from traditional mutual funds in that they are baskets of stocks that can be bought and sold throughout the day, unlike mutual funds, which are priced only at the end of the day. Like stocks, ETFs can be sold short, which some analysts say could be another reason for the heavy volume in the QQQ.

"More people are using the products for different strategies, like equitizing cash," says Edgar Cha, analyst for mutual fund research firm

Strategic Insight

, referring to the practice of when fund managers park assets in ETFs instead of building up their cash holdings.

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The dominance of a few funds despite the fact that the number of ETFs grew to 92 in 2000 from 32 in 1999 also shows that investors are still gravitating toward more established indices, says Traulsen.

One of the big drivers behind ETFs this year,

Barclays Global Investors

, launched 40 new


tracking everything from chemicals to consumer cyclical stocks. BGI also launched its own S&P 500 ETF, the

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iShare S&P 500, which saw about $2.3 billion in assets this year and an average consolidated daily trading volume of only 213,044. Total assets for all of the iShares products were $7.1 billion, according to Amex.

Lee Kranefuss, chief executive officer of BGI's individual investor business, says he is pleased with the evolution of the market for iShares this year. He says that his firm launched many of the funds, including the iShare S&P 500, in mid-May, when the markets were in the midst of the volatility that would plague them all year.

"We're totally thrilled. In a year when all of the products were launched after May 19, we managed to generate what was probably close to $6 billion in net cash flow," says Kranefuss. "For most mutual funds in this world, when you make it to the $100 million point, you've had phenomenal success, and it may take you years to get there."

Others point out that BGI has been one of the leaders in generating awareness of exchange-traded products this year with its advertising and marketing campaign. Kranefuss would not comment on how much Barclay's has spent on marketing, but says that the firm has made extensive efforts to try to educate people on the use of the products.

"They're doing the entire ETF world a favor with their advertising and education," says Salomon Smith Barney ETF analyst Kevin McNally.

McNally adds that the slim trading volume for some of the iShares should not pose a problem for investors, because there are always specialists ready to put forth a bid or an ask price on any of the funds. So thin trading does not mean poor execution, says McNally.

Some of the developments expected in the coming year include


introduction of its own exchange-traded funds, called Vipers, along with the introduction of fixed-income ETFs, which firms like BGI and

Nuveen Investments

have already started developing.

"I think that we've seen such a wave of new ETFs coming out already that I think it's going to slow," says Morningstar's Traulsen. "The question that's still outstanding is whether or not these companies can convince investors to make more use of them."