ETFs Look to Non-Traditional Indexes to Pique Interest

Although exchange-traded funds have drawn in record amounts of money, they are increasingly looking to non-traditional indexes that might excite investors more than standard ones, Kiplinger's reports.

Investment firms have recently launched ETFs based on dividend-paying stocks, micro-caps, precious metals and biotech. Now they are looking to what's being called "intelligent indexes," whereby stocks in the index get validated by back-testing past performance.

PowerShares Capital Management and Barclays Global Investors are two such firms that offers these types of ETFs. PowerShares builds indexes of companies with the greatest potential for capital appreciation, said Bruce Bond, chief executive officer of PowerShares. "Intelligent indexes discriminate between stocks with investment merit and stocks without investment merit," Bond said. For its part, Barclays introduced the iShares Dow Jones Select Dividend Index in 2003. Today, the fund has more than $6 billion in assets.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.