Business Week on ETFs (discusses VV, VXF, VWO, EEM)

Business Week published an excellent article about ETFs by staff writers Adriene Carter and Justin Hibbard. Key points and comments:

Key points from the article:

• ETF assets grew 50.7% last year. Inflows to Barclays ETFs were roughly $44 billion, exceeded only by mutual fund firms Vanguard and American Funds Group.
• ETF advantages: cheaper and easier to own than the average mutual fund; more tax efficient, and investors aren't hurt by fund redemptions.
• ETFs are increasingly pressuring the index mutual fund industry. E*Trade, Vanguard and Fidelity have cut fees on their index mutual funds, and Vanguard now offers the ETFs with the lowest expense ratios - 0.07% - in the industry.
• Index funds (including ETFs) are accounting for a rising proportion of total fund assets: 10% in 2002, 12% now, according to Financial Research Corp.
• ETF asset growth is expected to contine because financial advisors are increasingly using ETFs, and pension funds are now considering them.
• Actively managed ETFs are the next growth product, though some question their attractiveness.

Quick comment:

Why have ETFs grown so rapidly? The most important factors are:

1. ETFs are attractive to hedge funds. They're marginable (unlike index mutual funds), can be purchased via a prime broker, and can be shorted. Hedge funds still account for a large percentage of ETF holdings, though the exact number isn't known.
2. Barclays launched a massive marketing campaign, and as a result has taken significant market share from Vanguard and State Street.
3. ETF are platform-independent. This means that anyone with a brokerage account can buy (or receive) ETFs, whereas that's not the case for index mutual funds.
4. ETFs therefore offer a way for brokerage firms to take dollars from the mutual fund industry. That's why Ameritrade, for example, is pushing ETFs so hard. Ameritrade is a cheap way to buy ETFs and Ameritrade earns trading commissions on ETF trades. In contrast, the only broker to earn serious income from mutual funds was Schwab. (It receives an annual fee for funds bought in its mutual funds supermarket, which is one reason why they're so expensive.)

Quick question:
I couldn't find which Vanguard ETFs have expense ratios of 0.07%. If you know the ticker symbols of those two ETFs, please leave them below in a comment. UPDATE: Thanks to the two comments below, here are the two Vanguard VIPERs with industry-leading expense ratios:

• Large-Cap VIPER, ticker VV, expense ratio 0.07%
• Extended Market VIPER, ticker VXF, expense ratio 0.08%

Also, note that the Emerging Markets VIPER (ticker: VWO) has an expense ratio of 0.30%, far below the iShares Emerging Market Fund (ticker: EEM).