According to May’s fund flow data, long-term mutual funds lost $13.2 billion in net asset outflows last month. US stock funds were one of the hardest hit; they lost almost $15 billion, the largest monthly outflow since March 2009. Money market funds also saw a rush for the exits as $20 billion was pulled out, though the pace of outflows has slowed considerably.

Interestingly, exchange traded funds (ETF) saw inflows of $4.8 billion in May, pushing total year-to-date net inflows to $24.7 billion. That puts inflows well ahead of last year’s pace of $20.3 billion for the same period.

While a large chunk of those inflows have been into commodity ETFs whose structure makes it much easier for investors to target specific commodities such as oil, corn or a particular metal, flexibility also has been a major driver. Investors are increasingly demanding the ability to enter and exit funds when it’s convenient for them, not for the money manager.

Those trends in asset flows are drawing the attention of traditional mutual fund managers, who are beginning to enter the space at a rapid pace. Managers such as Eaton Vance, Legg Mason and T. Rowe Price are making moves into ETFs; even Dreyfus has made preliminary filings with the Securities and Exchange Commission (SEC) to offer a line of ETF products.

While there were few details in the filings–according to the documents the funds could invest in either equities or fixed income securities in both the US and abroad–the one thing that was clear is that Dreyfus plans on the funds being actively managed.

The space is becoming more competitive–PIMCO currently has about $202 million in ETF assets under active management, PowerShares actively manages about $50 million and Grail Advisors has around $27 million–but there are still many opportunities as overall the pace of new entrants is still rather sedate.

The rush to launch active ETFs is putting increasing pressure on the SEC to reexamine its rules requiring daily disclosure of fund holdings.

Many managers are reluctant to provide that level of disclosure on active strategies because it sets up an opportunity for traders to front run their portfolio moves. That’s of little concern for small ETFs that don’t have the assets to really move securities prices, but it’s a bigger challenge as fund’s asset base grow.

The big question now is where the SEC will come down on whether or not to impose the same disclosure requirements on actively managed funds as those imposed on passive index funds. If a distinction is made, expect to see a stampede of new actively managed funds.

What’s New

Teucrium Corn Fund (NYSE: CORN) began trading on June 9 and judging by the volume it’s generating, it’s caught the interest of investors. With $5.2 million in assets, a week after the fund’s launch it’s now generating an average daily volume of about 2,500 shares, which is fairly impressive for a newly launched ETF. The fund currently carries an expense ratio of 1.71 percent.

One major factor behind the fund’s initial popularity is that while two ETNs exist that provide grain exposure–iPath DJ-UBS Grains Sub-Index Total Return ETN (NYSE: JJG) and Elements MLCX Grains Index Total Return ETN (NYSE: GRU)–Teucrium Corn Fund is the first that provides direct exposure to corn.

The Corn Fund tracks a daily weighted average of the closing settlement prices for the second-to-expire Chicago Board of Trade (CBOT) futures contract which is weighted at 35 percent, the third-to-expire CBOT contract which is weighted at 30 percent, and the contract which expires in the December following the expiration of the third-to-expire contract which is weighted at 35 percent.

By blending the futures contracts held, the negative effects of contango — a situation in which futures with longer expirations cost more than those expiring sooner — should be minimized though not totally eliminated.

The other major launch of last week is actually a series of target date bond funds which are designed to mature like an individual bond.

On June 7, trading began in a lineup of seven Claymore BulletShares Corporate Bond ETFs with maturities ranging from 2011 to 2017. The individual issues are:

·        Claymore BulletShares 2011 Corporate Bond ETF (NYSE: BSCB)

·        Claymore BulletShares 2012 Corporate Bond ETF (NYSE: BSCC)

·        Claymore BulletShares 2013 Corporate Bond ETF (NYSE: BSCD)

·        Claymore BulletShares 2014 Corporate Bond ETF (NYSE: BSCE)

·        Claymore BulletShares 2015 Corporate Bond ETF (NYSE: BSCF)

·        Claymore BulletShares 2016 Corporate Bond ETF (NYSE: BSCG)

·        Claymore BulletShares 2017 Corporate Bond ETF (NYSE: BSCH)

All of the funds carry a 0.24 percent expense ratio and each will invest in investment-grade corporate bonds maturing in its respective target year. At maturity, each fund will pay out the net asset value of any shares held by investors.

While the funds will be useful for investors whose strategy involves targeting specific maturities — such as building a laddered bond portfolio or investing towards a goal with a fixed point in time — the funds will likely prove very useful. Beyond that, most investors would be better served by holding index funds with maturity targets rather than fixed maturity dates.