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"Certainly there are products that aren't going to survive. But the latest numbers show that ETFs remain immensely popular," said Traynor. "About $400 billion in net cash flow has come into ETFs since 2005. That's an amazing amount in less than four years."
The pullback in ETF inflows and market depreciation did nothing to dampen the trend of overall trading gains by ETFs as part of the U.S. equities market. There was close to $3.3 trillion in October ETF trading volume, another record level, up from $2.8 trillion (35%) in September.
But comparing trading volume versus all types of stocks trading on U.S. exchanges in the month, some 38% were ETFs. That was also a record performance, says Traynor.
And again, due to the widespread use of the SPDR (AMEX: SPY), State Street Global Advisors represented approximately one-half of all ETF trading volume.
"The SPDR has been there for awhile. But that's definitely changing as more and more products are becoming more actively traded," said Traynor.
Three of the top 10 most-traded ETFs in 2008 are now ProShares 2x inverse (or ultra-short) funds. Those are the UltraShort Financials (AMEX: SKF); UltraShort QQQ ProShares (AMEX: QID) and UltraShort S&P 500 (AMEX: SDS).
"ProShares is having a very big year," said Traynor.
The much-maligned exchange-traded note market continued to suffer in October. Only one ETN, managed by HSBC, had net inflows—of roughly $2 million. Barclays Capital had net outflows of $402 million, representing the majority of the ETN market's $520 million in net outflows for the month.
In terms of category leaders, bonds along with currencies and commodities were all negative in terms of flows in October. Commodity ETFs led the way in outflows with $1.7 billion; followed by currency ($862 million) and fixed income ($647 million).
Six of the 10 largest ETFs had net inflows in October, led by SPY, which took in $4.4 billion. The iShares MSCI Emerging Markets (NYSEArca: EEM), had the second-highest net inflows for the month, at $3.6 billion.
The four industry flagships to experience net outflows were the iShares Russell 2000 (NYSEArca: IWM), down $3.766 billion; the PowerShares QQQs, down $1.23 billion; the SPDR Financial (AMEX: XLF), down $912 million; and the SPDR Equity Gold (NYSEArca: GLD), down $151 million.
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