A rising U.S. dollar attracted a flood of capital into this ETF, enough to more than double its net assets in one month. The December inflows also accounted for 60% of the fund's inflows in 2009, enough to place UUP in eleventh place in net inflows for the year.
The surge in assets caused the fund to halt creation for the second month in a row, as dollar bulls bought up the existing supply. Creation resumed on Jan. 5 following SEC approval for more shares, but the inflows have turned into outflows this year. Almost $500 million has exited the fund in 2010, or just over 25% of the net inflows from December, as the hot money heads for the latest action.
Judging by fund flows, ETF investors made diversified bets in December, but the plain vanilla SPDR S&P 500 (SPY) garnered the largest net inflows, at $11.6 billion. It was followed by UUP, which had $1.8 billion in net inflows; iShares Russell 2000 (IWM), with $1.6 billion; Vanguard MSCI Emerging Markets (VWO), with $1.2 billion; and SPDR Utilities (XLU), with $1 billion.Emerging markets remained a favorite destination of investors. In addition to the flows into VWO, iShares MSCI Emerging Markets (EEM) saw $941 million flow into the fund. Also, iShares Barclays TIPS (TIP) was still a favorite, with the eighth largest inflows in December, at $756 million. IWM and XLU were two rebounding ETFs. Small caps, which lagged in the autumn, turned around in December, while utilities, which were laggards for the whole year, also staged a year-end rally.