Exchange-traded funds have failed to lure individual investors back to the stock market as hoped, though a year has passed since they debuted on Japan's two key exchanges, securities industry officials said Friday.

Trading in ETFs remains lackluster due largely to lower stock prices, the officials said.

An ETF represents a basket of stocks that reflects an index but is traded like a stock. Unlike a mutual fund, whose net asset value is calculated at the end of each trading day, an ETF's price fluctuates throughout the day via buying and selling.

The Tokyo Stock Exchange and the Osaka Securities Exchange listed a total of five ETFs on July 13, 2001. The number has since increased to 18.

Trading of ETFs peaked at 295 billion yen in August but has since been on the decline due to a nearly 20 percent fall in stock prices in the past year, as measured by the 225-issue Nikkei average.

As ETFs diversify risks, they are considered well-suited to luring individual investors. The TSE has therefore held more than 30 seminars to explain ETFs to individual investors.

But individuals still account for only 20 percent of ETF trading. Such trading is dominated by securities companies buying and selling the funds for their own accounts.

Banks were granted permission to sell ETFs over the counter in April, but few are eager to do so as the market for ETFs is not big enough to cover the costs, including purchasing new computer systems and educating personnel.