The E*Trade Funds has filed a proxy with the Securities and Exchange Commission to merge its E-Commerce Index Fund into its Technology Fund. The change, which shrinks the Menlo Park, Calif. firm's lineup to six funds, was fueled by 'changing industry conditions and investor needs,' according to the proxy.

'What E*Trade is doing is not dissimilar to what other fund groups have done where they have created a sub-sector of technology and found that they haven't enough legs to stand on,' said Geoff Bobroff, a East Greenwich, R.I.-based industry consultant.

The E-Commerce Index Fund has $27.2 million in assets under management. According to the filing, the fund's 'assets have been decreasing steadily' while the $49.0 million in the Technology Fund has grown steadily in the first half of this year.

While the funds are considered substantially similar, each is designed to follow different indexes. The funds track the Goldman Sachs E-Commerce Index and Goldman Sachs Technology, respectively.

Recently, E*Trade pulled the plug on its Extended Markets Index and Global Titan Funds. The funds had $11.5 million and $13.2 million in assets under management, respectively, as of June 30, according to Financial Research Corporation of Boston.

The firm is left with its Bond, Financial Sector, International, Russell 2000, S&P 500, and Technology Index funds.

While the S&P 500 Index Fund remains healthy with $70.4 million in assets and double-digit positive flows this year; the second largest fund is the soon-to-be-bolstered Technology Index Fund, with the doomed E-Commerce, Global Titan, and Extended Market Index Funds lagging far behind.

Looking at the numbers, the International Index Fund would seem a likely candidate for E*Trade's next round of cuts. With only $7.2 million in assets and year-to-date flows of under half-a-million dollars, the fund is clearly not pulling its weight. The Bond Index Fund is the runt of the family, having garnered only $4.4 million. Even in a bond-friendly market, the fund picked up less than a million dollars through June of this year and remains below the required minimum for most institutional segregated bond accounts

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