June ETF Market Recap

June was yet another month marked by choppy fund flows. While natural gas and retail ETFs did well, emerging market performance varied considerably -- in particular, one should note the switch from iShares MSCI-Emerging Markets ( EEM) to Vanguard MSCI Emerging Markets ( VWO) -- this phenomenon is attributed to a sizeable difference in expense ratios, as well as the recent overall outperformance of VWO.

Also notable was the shift from SPDRs ( SPY) to iShares S&P 500 Index ( IVV), though they have very similar expense ratios. The sheer size and time on the market of both EEM and SPY may also have been factors.

Assets in U.S. listed ETFs and ETNs totaled roughly $603.5 billion by the end of June, with the number of listed products increasing by 33, to a current total of 837. Meanwhile, June 2009 net cash inflows totaled approximately $12.4 billion, and year-to-date net cash inflows totaled approximately $41.9 billion.

In terms of specific funds, U.S. Natural Gas ( UNG) dominated the market with $1,698 million in new funds over the past month. Meanwhile, iShares Barclays TIPS ( TIP) saw $942 million in new money, Vanguard MSCI Emerging Markets ( VWO) $777 million, SPDR Retail ( XRT) $709 million, and iShares S&P 500 Index $642 million.

Meanwhile, in part due to Vanguard MSCI Emerging Markets' lower expense ratio (0.27, versus EEM's 0.72), iShares MSCI-Emerging Markets ( EEM) suffered heavy outflows in June, falling by whopping $1,671 million. Vanguard MSCI Midcap ( VO) saw $863 million exit; US Oil Fund ( USO) had outflows of $710 million; and SPDR S&P 500 Index and SPDR Healthcare ( XLVl)(XLV) both declined ($525 million and $457 million, respectively).

Overall, June's most attractive ETFs for investor dollars were commodities and retail sectors, with a decline in the health care sector, and a notable shift between emerging market and S&P 500 Index ETFs.

Top Five:

1. $1.698 Billion -- US Natural Gas

2. $942 Million -- iShares Barclays TIPSP

3. $777 Million -- Vanguard MSCI Emerging Markets

4. $709 Million -- SPDR Retail

5. $642 Million -- iShares S&P.

Bottom Five:

1. $1.671 Billion -- iShares MSCI-Emerging Markets

2. $863 Million -- Vanguard MSCI Midcap

3. $710 Million -- US Oil Fund

4. $525 Million -- SPDR Index 500

5. $457 Million -- SPDR Health Care.

At the time of publication, Dion owned iShares S&P 500 Index and iShares Barclays TIPS.

Don Dion is the publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

Dion is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

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