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AdvisorShares, Global X Hauling In Assets

AdvisorShares and Global X, two relatively small ETF sponsors, managed to gather enough assets in July to bring them closer to achieving critical mass in the increasingly competitive world of ETFs, data compiled by IndexUniverse.com show.

AdvisorShares, a Bethesda, Md.-based firm with a growing lineup of actively managed ETFs, almost tripled its assets last month, largely because of the success of its Mars Hill Global Relative Value ETF (NYSEArca:GRV) that it rolled out on July 9. New York-based Global X meanwhile saw assets grow 38 percent last month, with more than half from two China-sector ETFs.

Their success comes at a time of growing concentration in the ETF industry. The top five firms controlled about 92 percent of the $835.53 billion in assets in U.S. ETFs at the end of last month, according to the flows data compiled by IndexUniverse.com. Also, seed money to start new funds is getting harder to come by as the industry matures and because the best ideas have mostly been brought to market.

"We basically have very good products," Bruno del Ama, chief executive officer of Global X, said in a telephone interview, responding to a question as to why his company appears to be gaining favor among investors. "Good ideas matter, but also so does good execution," he said.

Global X

Overall, Global X added $99 million in new investments last month, bringing its total assets under management to $360 million.

The company's China-focused products figured highly in the positive flows. The Global X China Consumers ETF (NYSEArca:CHQ) pulled in $43.0 million, almost enough to double the fund's assets to $90 million. The Global X China Materials ETF (NYSEArca:CHIM) attracted $9.9 million, lifting the total in the ETF to $36.9 million.

"It's not a one-month phenomenon," del Ama said. "If you look at the last six months, you will see exponential growth in assets from one month to another," he added. "Our products provide access to markets that are difficult to access and that are unique and innovative, so we're going to continue to see more of those assets come in."

Global X launched in February 2009.

AdvisorShares

To the extent that a miniscule portion of the U.S. ETF industry is in active funds, AdvisorShares, as a small firm, has had an especially rough row to hoe.

It's hard enough for any small firm to launch a new fund now that the industry is no longer in its infancy, and actively managed ETFs, by and large, haven't had much success attracting assets.

The Pimco Enhanced Short Maturity Strategy ETF (NYSEArca:MINT), a money market fund proxy, has been as good as it's gotten for active strategies. The fund attracted upward of $800 million when investor anxiety about problems in Europe were peaking in spring, though that has dipped to just above $300 million as worries have abated.

However, AdvisorShares' relative value fund "GRV" has emerged as a new example of how some active strategies may have what it takes to gain popularity among investors. About $38.8 million of the $43 million AdvisorShares attracted last month came from GRV.

"Most of the assets were flowing into that Mars Hill Relative Value Strategy [fund]," Noah Hamman, chief executive officer of AdvisorShares, said in a telephone interview.

Hamman said talking extensively with advisers after the fund had completed its registration process enabled the company to understand that there was demand for the fund. Having that knowledge about what the market was ready for helped make it easier to gather the seed funding necessary to launch the fund.

"The way we were able to do it was to be able to demonstrate that we know people are coming into that product on day one or week one," Hamman said. "With products that have demonstrable asset growth, you can find seed money; it's not that hard."

Don't forget to check IndexUniverse.com's ETF Data section.

Copyright ® 2010 Index Publications LLC . All Rights Reserved.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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