ETF Scoreboard for 2010

NEW YORK (TheStreet) - As evidenced by the monthly flow report from the National Stock Exchange, the ETF industry as a whole saw continued expansion in the final month of 2010, closing out the successful year on a strong note.

Notably, as investors continued to pile into these attractive products and the markets continued along the road to recovery total ETF/ETN assets managed to power through the $1 trillion mark.

From a sponsor perspective, BlackRock ( BLK) continues to be the largest fund provider, with assets under management totaling $447 billion. In 2010, $30 billion flowed into the firm's products. While the firm sits comfortably at the top of the list for now, in the coming year, investors will want to keep a close watch on Vanguard.

The $30 billion flowing into BlackRock's products marks a considerable decrease from the more than $40 billion that entered the company's products in 2009. Vanguard, on the other hand, saw an uptick in asset inflows from the year previous. In 2010, a total of $40 billion entered the company's products, beating the $28 billion which flowed into the firm's funds in 2009.

Much of Vanguard's rise to prominence in the ETF industry can be traced back to the company's ability to launch products which undercut the expense ratios of long standing veteran funds. At the end of 2010, Vanguard's total ETF assets under management stood at approximately $150 billion.

A number of smaller ETF providers saw staggering year-over-year inflow growth as they continued to find new and unique market niches to attract investors. Two themes which successfully drew investor assets over the past year were base- and precious metals- related funds.

Global X, which has recently taken to launching funds aimed at various metals producers, saw one of the largest upticks in inflows while relative newcomer, ETF Securities has continued to see a lot of success with its suite of physically-based precious metals funds.

Not all firms saw inflows over the past year, however. In 2010, U.S. Commodities Funds and Merrill Lynch's HOLDRs both saw investors head for the exits.

From an individual fund perspective, it appears as though investors are warming up to U.S. equities. Sitting at the top of the list in Demember, are broad domestic stock funds including the SPDR S&P 500 ETF ( SPY), the iShares Russell 2000 Index Fund ( IWM) and the Vanguard MSCI Total World ETF ( VTI). These funds managed to gather $6 billion and $1.8 billion, and $1.6 billion respectively.

Single sector funds such as the Financial Select Sector SPDR ( XLF), the Energy Select Sector SPDR ( XLE) and the SPDR S&P Retail ETF ( XRT) saw big inflows as well.

Bucking this trend however, was the PowerShares QQQ ( QQQQ). During the month, QQQQ saw heavy outflows totaling $1.3 billion.

Although investors had their sights set on domestic equities, the rest of the world did not go unnoticed in the final month of the year. A handful of global equities ETFs were also at the head of the pack, including the Vanguard Emerging Market ETF ( VWO) and the iShares MSCI Japan Index Fund ( EWJ).

Once again, Vanguard's VWO continued to steal assets from the veteran iShares MSCI Emerging Market Index Fund ( EEM). Though older, in December, this more expensive fund saw the heaviest outflows across the ETF universe, totaling $1.4 billion.

VWO has covered a lot of ground in its assault on EEM. As of December 2010, the Vanguard fund's assets stood at $44 billion, just shy of EEM's $47 billion. In the coming months it will be exciting to see if Vanguard's fund eclipses its veteran competitor.

The ongoing price wars could be felt in other corners of the ETF universe as well. Physically-based gold ETFs continued to diverge; iShares Gold Trust ( IAU) gathered $462 million while SPDR Gold Shares ( GLD) saw nearly $250 million head for the exits.

Yield remains attractive as investors seek the comfort that comes with consistent distributions. Income-oriented products including the SPDR Barclays Capital High Yield Bond Fund ( JNK) and iShares Dow Jones U.S. Select Dividend Index Fund ( DVY) saw notable inflows.

Despite the market's strong run-up, investors continued to show interest in the fear-tracking VIX index. The iPath S&P 500 VIX Short Term Futures ETN ( VXX) saw a disconcertingly strong uptick in assets despite the fund's consistent downward action. Interestingly, VXX's sister fund, the iPath S&P 500 VIX Mid Term Futures ETN ( VXZ) saw heavy outflows.

As we head further into the new year, we can expect to see new and exciting market trends develop which will shape investor interests in ETFs.

Written by Don Dion in Williamstown, Mass.

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At the time of publication, Dion Money Management owned PowerShares QQQ, iShares Gold Trust, iShares Dow Jones U.S. Select Dividend Index Fund and iShares MSCI Japan Index Fund.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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