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Rally Spurs China, Financial-Services ETFs

As the stock market started its rally almost a month ago, investors poured money into China, financial and emerging-markets ETFs.

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

If an ETF investor believes a) the March surge was the start of a new bull market; and b) the first ones out of the starting gate are likely to lead the pack later on, he or she ought to consider the

iShares FTSE/Xinhua China 25


, the

Financial Select Sector SPDR


and the

iShares MSCI Emerging Markets


exchange-traded funds.

Those China, financial and emerging-markets ETFs, along with the

PowerShares QQQ


, rang up double-digit percentage gains last month to lead the non-leveraged funds on the accompanying tabulation of the 20 most popular ETFs, as measured by daily average dollar volume of trading.

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The popularity of leveraged ETFs appears to have waned. Only seven of the top 20 ETFs are leveraged, one fewer than a

month earlier

. Only five of the geared ETFs are "inverse" funds, down from six "short" ETFs in February.

Moreover, the buoyant stock market seems to have dampened enthusiasm for super-leveraged ETFs. Three Direxion "3x" (tripled leveraged) funds that made the top 20 in February are absent from this month's roster.

As has been the case in recent months, the



tops the list of the 20 most popular ETFs. The fund's top holdings include blue chips

Exxon Mobil



General Electric









Retaining its hold on the second position on the list, the PowerShares QQQ, which gained 10% during the month, was traded at an average daily pace of $5 billion in March.

The fund holds the 100 largest Nasdaq-listed stocks, which, in addition to Microsoft, include










Disclosure: The writer holds long-term positions in QQQQ, FXI and XLF in a retirement account.

Richard Widows is a senior financial analyst for Ratings. Prior to joining, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.