ETF Expert

It's true that the second most coveted ETF by dollars invested in May was the iShares Emerging Market Fund (EEM). Investors poured $1.07 billion into EEM… and roughly $800 million more into the Vanguard Emerging Market Fund (VWO).

(Note: VWO and EEM both track identical indexes… the MSCI Emerging Market Index.)

There's little doubt that the investing public has embraced the emerging market growth story.  Yet rather than look at investor desire in absolute dollar terms, I thought we might learn a little something different by examining ETF interest in percentage growth of total net assets.

Judging form the looks of these figures, it doesn't appear that traders are finished betting against the well-being of the U.S. financial system. We're looking at 60%+ growth in a fund that seeks 3x the daily inverse performance of the Russell 1000 Financial Services Index. And for that matter, pursuing double the inverse performance of the S&P 500 with ProShares UltraShort S&P 500 (SDS) may be a message from traders that reads, "It aint over."

By the same token, one can't have a mid-cap fund like Vanguard MSCI Mid-Cap (VO) jump in demand by nearly 40% in a single month if there weren't believers in U.S. economic recovery. VO gained 4% in May, and currently resides above a long-term moving average.

Yet for me, the most telling net asset growers have a "greet shoots" stake in alt energy and tech. In fact, one month ago, I suggested that the US Natural Gas Fund (UNG) could surge if oil kept on rising.

Oil kept rising alright. Did UNG follow suit? it did pile on 11% in May… but the results have been pretty spotty. Volatility and inconsistency still plague the commodity. At the same time, an awful lot of investor interest came UNG's way in May.

Finally, the iShares Taiwan Index (EWT) is an enigmatic investment, as it is hardly an emerging market growth story. In truth, it is one of the strongest indications on the health of th e global economic cycle because it's lifeblood is semiconductor demand. And semiconductor demand historically leads the way out of recessions.

Taiwan is even more intriguing these days because of its relationship with China. In spite of well-publicized political differences, Taiwan remains of of China's most important suppliers.

iShares Taiwan Index (EWT) is up a staggering 40% in 2009. It is also more than 20% above its 200 day moving average. (Review my April column, "3 Asian Countries Are Rocketing Higher.")

If you'd like to learn more about ETF investing… then tune into "In the Money With Gary Gordon." You can listen to the show "live" or via podcast or on your iPod at this link.

Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Advisor with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.