Assets of exchange-traded funds have declined during the current market downturn, along with those of many mutual funds. That is no surprise. However, unlike stock mutual funds, which experienced net outflows in February, exchange-traded funds are being used more than ever, as average daily trading volume continues to rise.

That is somewhat of an anomaly because, in general, market trading goes down when stock prices go down, according to Donald Cassidy, senior analyst with Lipper of Summit, N.J. Another reason the increasing popularity of exchange-traded funds during the down market is surprising is that they are passively-managed, which can be a disadvantage during volatile and declining markets, according to Ramy Shaalan, mutual fund analyst at Wiesenberger/Thomson Financial of Rockville, Md.

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