ETF Winners and Losers

Last year was generally a period of strong growth for the biggest ETFs in the industry; of the 23 largest exchange-traded products, only three saw net outflows in 2011: GLD, the iShares Emerging Markets Index Fund (EEM), and the iShares Russell 2000 Index Fund (IWM). Four ETFs saw more than $5 billion in new cash in 2011, including SPY, the Vanguard MSCI Emerging Markets ETF (VWO), the iShares MSCI EAFE Index Fund (EFA), and the Vanguard Total Bond Market ETF (BND).

Other ETFs experiencing noteworthy inflows in 2011 highlight some trends among investors during the last year. Vanguard’s Dividend Appreciation ETF (VIG) took in about $4.1 billion, representing almost 90% of assets in the fund at the end of 2010. Dividend-focused products have been in high demand in recent months, as investors seek out tools to boost the current return on their portfolio and scale back risk as well. The Market Vectors Agribusiness ETF (MOO) saw inflows of about $3.7 billion in last year, more than the $2.6 billion in AUM at the end of 2010. Many investors have embraced “indirect” exposure to commodities through the stocks of companies engaged in the extraction and production of raw materials-including many of the ETFs in the Commodity Producers Equities ETFdb Category.

Two head-to-head battles of popular ETFs saw big swings in 2011. The two ETFs linked to the MSCI Emerging Markets Index-iShares’ EEM and Vanguard’s VWO-experienced wildly different fates last year; VWO took in about $7.8 billion in inflows, while EEM saw outflows of almost $6.8 billion. Another iShares ETF, the COMEX Gold Trust (IAU) was on the winning end of its battle with a more established and more expensive competitor. IAU, which holds gold bullion, took in about $2.7 billion in new cash. The Gold SPDR (GLD), which also offers physically-backed exposure to gold-saw outflows on the year of more than $300 million. IAU charges just 0.25%, while GLD has an expense ratio of 0.40%.