As regulators warn about the risks of using leverage, investors seem to be running from exchange-traded funds trying to juice market returns.

But is that really the case?

The most recent recap of monthly asset levels in the industry came out late last week as State Street Global Advisors released its August review of market trends. In the report, SSgA estimated a 6.8 percent drop in assets for the leveraged and inverse ETF categories. Combined, that amounted to almost a $2.1 billion fall from the previous month.

But as we’ve stated on numerous occasions, assets are just one part of the equation. Asset data, of course, is comprised of both appreciation in market values as well as redemption and creation activity. From the SSgA report we know that while the S&P 500 rose 3.6 percent, overall ETF assets gained 3.3 percent on the whole. That set a new record for the industry with $661 billion entering September.

(You can read the complete SSgA report in IndexUniverse.com’s Research section.  Perhaps of particular interest might be the study’s estimates of short interest by asset class as well as top U.S. ETFs by trading volume.)

In order to gain a more complete picture of what took place in August, investors can also turn to recently reported data compiled by the National Stock Exchange. It not only considers asset levels, but also lists breakdowns of net inflows and outflows by category and individual ETFs.  (See full tables updated through August at the bottom of this report.)

Digging Deeper: Net Cash Flows

While the NSX data recorded record assets at the end of August ($665.2 billion), it also showed nearly $4.9 billion in net inflow into 770 different ETFs. (The SSgA report listed 755 in the U.S.) Barclays Global Investors was the leader by a more than 2-1 margin over No. 2 SSgA ($326 billion vs. $160.6 billion).

Interestingly, looking at the chart of top individual gains, better-than $110 billion of SSgA’s assets in August came from two funds – the SPDR S&P 500 (NYSEArca: SPY) and the SPDR Gold Trust (NYSEArca: GLD).  Meanwhile, BGI’s iShares brand captured six of the top 10 biggest asset collectors in August, led by the iShares MSCI EAFE (NYSEArca: EFA) and the iShares MSCI Emerging Markets (NYSEArca: EEM).

Together, BGI and SSgA made up almost $487 billion of U.S. ETF assets by month’s end. More than half of that total ($257.4 billion) came from the biggest 10 funds.

In terms of cash flows, August was another strong month. Net inflow into all ETFs reached $4.9 billion, pushing 2009 figures past $52 billion – almost $10 billion more than the same time last year.

But, of the top 10 funds, only four attracted positive flows in August. Those were the: iShares S&P 500 Index (NYSEArca: IVV); iShares Barclays TIPS Index (NYSEArca: TIP); iShares Russell 2000 Index (NYSEArca: IWM) and Vanguard Total Stock Market ETF (NYSEArca: VTI).

The United States Natural Gas Fund (NYSEArca: UNG), which was closed to new creation units during the month, still wound up with about $4.6 billion in net cash flow year-to-date. That could shoot up even more – or take a big drop -- at the end of September when the ETF’s managers plan to re-open UNG. (See related story here.)

Winners Among Leveraged & Inverse ETFs

It’s also worth noting that of the nearly $5 billion in net inflows during the month, more than $1 billion came from four leveraged and inverse ETFs. Another 14 combined to add around $500 million in net inflows during August.

So, while top-line highlights considering just asset levels might indicate that leveraged and commodity ETFs had a rough month, consider some of the most popular ETFs in the month including (in millions of dollars):

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