Van Eck Global, the money management firm known for its commodities investment strategies, began the exchange offers under which six Merrill Lynch-sponsored exchange-traded HOLDRS securities will switch into six corresponding Market Vectors ETFs.

The exchange offers, which Van Eck first announced in August, will expire unless extended on Dec. 20. Trading in the six HOLDRS will be suspended 30 minutes prior to the offer expiration, and the Van Eck ETFs that replace them will begin trading the following day, the company said in a press release.

The six HOLDRs have a combined $3.49 billion in assets, or around 90 percent of all the assets in Merrill’s 17 existing HOLDRs.

The exchange offers are the latest sign that the ETF juggernaut is gathering steam. As of Nov. 9, investors had more than $1.070 trillion allocated to various U.S.-listed ETFs. Inflows into ETFs have outpaced those into any other investment vehicle as investors become more familiar with the benefits of the ETF structure.

HOLDRs, on the other hand, have had their day. The funds, which are holding company depositary receipts Merrill Lynch launched in the late 1990s and early 2000s, are narrowly focused portfolios that, once created, never changed. They are exchange traded like ETFs, but that set-and-forget aspect has made them increasingly irrelevant as ETFs have evolved.

“We have structured the offers, in our view, to be investor friendly,” Adam Phillips, managing director of ETFs at Van Eck, said in the press release. “Potential benefits of participation include the opportunity for uninterrupted exposure to target industries, a partially tax-advantaged exchange, and no costs associated with the offers.”

The HOLDRS involved in the exchange offers, and their assets as of Nov. 9, are:

• Oil Services HOLDRS (NYSEArca: OIH), $2.00 billion
• Semiconductor HOLDRS (NYSEArca: SMH), $556.2 million
• Pharmaceutical HOLDRS (NYSEArca: PPH), $504.8 million
• Biotech HOLDRS (NYSEArca: BBH), $257.5 million
• Retail HOLDRS (NYSEArca: RTH), $93.1 million
• Regional Bank HOLDRS (NYSEArca: RKH), $75.0 million

All of the involved securities will retain their trading symbols, the New York-based firm said.

Exchange Mechanics

Under the exchange, each HOLDRS share will be exchanged for a share in the new respective ETF, with the value of each tendered share determined by the value of the underlying securities as of the close of business on the date the exchange offer expires, Van Eck said.

In its press release, Van Eck implored investors to consult the risks involved with participating in the offers, and specifically mentioned that the 0.35 percent annual expense of the new ETFs will be higher than expenses associated with the HOLDRs.

We weighed the various options HOLDRS have and their consequences in a recent blog titled “Taxes And The HOLDRS Demise,” including selling them, keeping the underlying securities without the HOLDRS wrappers, or taking Van Eck up on its offers.

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