VWO Most Popular US ETF In 2010

October 04, 2010

Year-to-date asset-gathering by U.S. ETFs has been all about emerging markets, fixed income and gold.

The Vanguard MSCI Emerging Markets ETF (NYSEArca: VWO) is far and away the most successful U.S. ETF in 2010 and a symbol of investors’ increasing confidence that rapidly growing developing countries are one of the surer bets at a time of global economic uncertainty.

Investors have also put big money into gold and particularly fixed-income ETFs as they search for ways to deal with all the uncertainty and volatility coursing through the global economy in the wake of
Europe’s sovereign debt crisis that blossomed fully in the spring. Europe’s crisis, centered on
Greece
, began to take shape about a year into the powerful rally from the market’s March 2009 lows.

VWO gathered $13.32 billion in the first nine months of the year, about twice as much as the SPDR Gold Trust (NYSEArca: GLD), the second-most popular U.S. ETF this year, according to data compiled by IndexUniverse.com. The Vanguard ETF also collected almost five times as much as its rival, the iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM) and remains on track to overtake EEM before long.

Fixed income was the single most-popular asset class for ETF investors, who sank almost $30 billion into bond funds in the first three quarters of the year.

Overall, the U.S. ETF industry attracted $78.70 billion through September, lifting total assets to about $901 billion.

Vanguard, riding the popularity of VWO and benefiting from its reputation as the low-cost provider in the ETF world, has been the most successful at gathering assets this year. The Valley Forge, Pa.-based firm, the third-biggest in assets, has added $26.77 billion this year, compared with $20.85 billion and $6.85 billion for iShares and State Street Global Advisors, the No. 1 and No. 2 companies, respectively

Biggest Losers

Meanwhile, IndexUniverse.com’s “Biggest Losers” list didn’t have one bond among its top 10.

At the top was the SPDR S&P 500 ETF (NYSEArca: SPY), which suffered $7.96 billion in redemptions through September. SPY was a big reason overall
U.S.
equity creations were only about $5 billion.

While international equity ETFs had strong inflows, even foreign funds from the emerging markets couldn’t escape the downdraft in global markets.

For example, investors pulled $1.51 billion out of the iShares FTSE/Xinhua China 25 (NYSEArca: FXI), an ETF that focuses on the 25 biggest Hong Kong-listed Chinese companies. Analysts have fretted about the possibility of a real estate bubble derailing
China
’s growth.

They also pulled $795.0 million out of the iShares MSCI Brazil Index Fund (NYSEArca: EWZ) and $689.1 million out of the iShares MSCI Taiwan Index Fund (NYSEArca: EWT).

 

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