Leveraged, Inverse and VIX ETFs Grow

WILLIAMSTOWN, Mass. (TheStreet) -- A number of leveraged and inverse ETFs attracted capital at a fast clip last month, including ProShares UltraPro Short S&P 500 (SPXU) and iShares DB Gold Short ETN (DGZ). SPXU saw $72 million net flow into the fund and finished July with $69 million in assets. DGZ saw net inflow of $31 million and finished the month with $44 million in assets.

Aside from the leveraged and inverse ETFs, here are the ETFs with the largest inflows as a percentage of assets. iPath S&P 500 VIX Short Term Futures ETN ( VXX) saw $273 million flood into the fund as it grew to $408 million in total assets. Market Vectors Brazil Small Cap ( BRF) had net inflows of $59 million, while $34 million poured into iShares Peru ( EPU). Market Vectors Indonesia ( IDX) gathered $27 million in assets, while iPath DJ UBS Nickel ETN ( JJN) and iPath DJ UBS Sugar ETN ( SGG) each attracted $7 million in assets.

Other notable growers were Vanguard Mega Cap 300 Growth ( MGK), which saw assets grow to $494 million after gaining $203 million in net inflows. ProShares UltraShort FTSE/Xinhua China 25 ( FXP) added $117 million and closed July with $270 million in assets.

ETFs seeing major outflows as a percentage of assets were led by Direxion Daily Financials Bull 3X ( FAS). It went from $1,771 million in assets at the end of June to $1,041 million at the end of July after suffering a $984 million outflow. On a percentage basis, but far less in terms of nominal dollars, iPath DJ UBS Cocoa ETN ( NIB) saw its assets fall 50% after $2 million left the fund. ProShares UltraShort Silver ( ZSL), PowerShares Dynamic Food & Beverage ( PBJ) and PowerShares Dynamic Banking ( PJB) rounded out the bottom five.

Repeating the findings from yesterday's article on the funds with the largest inflows and outflows, it's obvious that bearish investors are finding a use for the inverse ETFs as well as short-term VIX futures-tracking VXX. That fund rolls the first and second month VIX futures contracts. VXX declined as the market rallied, sending shares down 45% from $113 at the end of March.

iPath also offers a midterm VIX ETN: iPath S&P 500 VIX Mid Term Futures ETN ( VXZ), which is less volatile. It lost 25% over the same period, but it will also gain less if the VIX spikes during a market panic. VXZ rolls the fourth, fifth, sixth and seventh month futures contracts.

Also, the data shows that Vanguard is hitting its ETF stride. Its funds are competitive with iShares and SPDRs and the intense competition will eventually lead to lower expense ratios across the industry.

Fastest Growing/Shrinking ETPs in July
Inflows as a percentage of June assets
Growers (in millions): July AUM July Inflow
iShares MSCI Peru (EPU) $34 $25
iPath S&P 500 VIX Short Term Futures ETN (VXX) $408 $273
Market Vectors Brazil Small Cap (BRF) $122 $59
Market Vectors Indonesia (IDX) $56 $27
iPath DJ AIG Nickel ETN (JJN) $15 $7
iPath DJ AIG Sugar ETN (SGG) $15 $7
SPDR S&P Int'l Technology (IPK) $9 $4
Claymore/AlphaShares China Small Cap (HAO) $178 $75
Rydex S&P EW Health Care (RYH) $78 $33
Rydex S&P SmallCap Pure Growth (RZG) $12 $5
Shrinkers (in millions): July AUM July Outflow
PowerShares Dynamic Banking (PJB) $28 ($18)
PowerShares Dynamic Food & Bev (PBJ) $51 ($40)
ProShares UltraShort Silver (ZSL) $38 ($33)
iPath DJ AIG Cocoa ETN (NIB) $2 ($2)
Direxion Daily Financials Bull 3x (FAS) $1,041 ($984)
Source: National Stock Exchange

-- written by Don Dion in Williamstown, Mass.

At the time of publication, Dion had no positions in the stocks mentioned.

Don Dion is 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.

Dion also is 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.

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