ETF Investors Survive Rocky November

NEW YORK (TheStreet) -- November was a rocky month for the global markets as the economic woes facing the European Union and other corners of the globe intensified and weighed on confidence. Despite the seemingly resounding doom and gloom, ETF investors remained refreshingly resilient.

According to the fund flow data compiled by the National Stock Exchange, total ETF/ETN assets dipped less than $20 billion during the month of November. This ensured that the universe would stay buoyed above the $1 trillion mark heading into the final weeks of 2011.

The industry welcomed 13 new products last month, bringing the ETF universe to 1,150.

The majority of the losses came in the form of depreciation. As evidenced by the net flow data, only $238 million headed for the exits over the past month. Industry leaders State Street ( SST) and Blackrock ( BLK) had the biggest declines, with $5.1 billion and $1.6 billion in outflows respectively. The losses, however, were largely offset by low-cost ETF sponsor, Vanguard, which took in nearly $5.5 billion.

The SPDR S&P 500 ETF ( SPY) played a big role in propelling State Street to the top of the outflow leader board. Over the course of the month, over $4.5 billion left the product. The iShares Russell 2000 Index Fund ( IWM) and the iShares S&P 500 Index Fund ( IVV) rounded out the top three outflow leaders.

SPY was not the only State Street-sponsored product to see heavy outflows. Six of the ten largest outflow recipients carried the SPDR name, including the Financial Select Sector SPDR ( XLF), SPDR Dow Jones Industrial Average Index ETF ( DIA) and the SPDR Barclays Capital High Yield Bond ETF ( JNK).

Interestingly, at the same time that investors were fleeing SPY, they were piling into the company's other behemoth, the SPDR Gold Shares ( GLD). In November, this leading physically-backed gold ETF welcomed $3 billion, earning it the top spot among inflow recipients. The fund handedly beat out its iShares-sponsored competitor. Inflows totaling $345 million kept iShares Gold Trust ( IAU) from breaking into the top 15 list.

Although GLD led, Vanguard dominated the inflow leaders list. In a fashion mirroring State Street's November performance, Vanguard products commanded six of the 10 top spots among inflow leaders. Some of the most popular funds included the Vanguard MSCI Small Cap ETF ( VB), Vanguard Barclays Total Bond ETF ( BND) and Vanguard MSCI Small Cap Growth ETF ( VBK).

Not surprising given the headline-grabbing drama playing out across the EU, investors steered clear of Europe-linked ETFs in November. The iShares MSCI Germany Index Fund ( EWG) saw $250 million leave, while the broad-based iShares S&P Europe 350 Index Fund ( IEV) enjoyed over $100 million in net outflows.

Emerging markets were unpopular as well. Risk adverse investors fled Vanguard Emerging Market ETF ( VWO) and iShares MSCI Emerging Markets Index Fund ( EEM), resulting in $630 million and $144 million in outlows, respectively.

Interestingly, at the same time that investors appeared to be shunning risk, the most defensive asset classes were also avoided. The iShares Barclays 20+ Year Treasury Bond Fund ( TLT) and PowerShares DB U.S. Dollar Index Bullish Fund ( UUP) both ended the month with notable outflows.

On an encouraging note, however, investors showed a hunger for dividend-paying equities. Funds including Vanguard Dividend Appreciation ETF ( VIG), SPDR S&P Dividend ETF ( SDY) and iShares Dow Jones Select Dividend Index Fund ( DVY) could be found amongst the inflow leaders. As I've noted on a number of occasions, these products are attractive options for those looking for those looking to take on risk while, at the same time, defending against choppiness.

Overall, it was a peculiar, albeit encouraging month for the ETF universe. In the past we have seen how volatile market action can drive investors away from these popular products. However, as seen from November's fund flows, this bout of turmoil is doing little to sway individuals from the industry. It will be interesting to see how investors behave as we prepare to close the book on 2011.

Written by Don Dion in Williamstown, Mass.

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

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