ETFs ring up another record year of growth-

MarketWatch ^ | Dec. 30, 2007 | John Spence, MarketWatch

[Ernest_at_the_Beach]

BOSTON (MarketWatch) -- On the long-running television drama "Law & Order," fictional district attorney Jack McCoy's persuasive arguments often win over an undecided jury and seal the fate of that episode's villain du jour.

Now, the actor who plays the hard-driving lawyer, Sam Waterston, is making a case for exchange-traded funds in TV ads for online broker TD Ameritrade Holding Corp.

The commercials featuring the recognizable actor are another sign that ETFs -- essentially mutual funds that follow indexes and trade like individual stocks -- are moving into the mainstream.

Still, like a signature Jack McCoy cross-examination, the ads raise tough questions. Do many investors really know what ETFs are? Should you buy ETFs?

There were 603 ETFs with over $550 billion in assets and $75 billion in daily trading volume as of Nov. 12, according to Morgan Stanley. In recent years, the number and assets of ETFs have grown exponentially with more players entering the business and the investment products mirroring ever-complex strategies.

On the other hand, ETFs still represent a relative drop in the bucket for the $12 trillion mutual-fund business, although that could change if long-awaited actively managed ETFs become a reality.

This column champions the low costs, tax efficiency, transparency, diversification and trading ease of ETFs. However, it has steadily cautioned investors since its beginning to research and dig below the surface of more exotic ETFs before committing money. This closing column of 2007 looks back at what was another year of meaningful growth for ETFs and peers ahead at what could be the top storylines for 2008.

[Ernest_at_the_Beach]

Active management, leveraged products in spotlight for 2008

[Ernest_at_the_Beach]

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[SierraWasp]

Thank you Ernest.