Although retail investors have gravitated to exchange-traded funds, most of the money in them is still from institutional investors, noted FRC analyst Ross Frankenfield. "A lot of times, they [institutional investors] are using these as short-term solutions to equitize cash, and I think that's basically what's going on."
In fact, FRC data shows that while ETFs on the whole continued to take in sizeable net flows in February, their popularity is waning; they had $24.6 billion in net inflows in February, down 23% from $32.1 billion in the year-earlier period. Year-to-date through February, ETFs have netted $45 billion, down 44% from $81 billion in the first two months of 2004.
Meanwhile,