etfs

The indexed-based funds continue to see inflows increase even as other asset classes have seen investors pull back contributions in the face of market volatility. Laura Morrison, head of U.S. ETF trading and listings at NYSE Euronext says hitting this mark in 2010 bodes well for the industry going into next year.

The investment world's love affair with ETFs continued in 2010, as more than 1,000 funds managed assets of $940 billion. Here's a review of the best and the worst performers, and a few reminders about how to use these investment vehicles safely.

A good deal of gold's meteoric gains over the last five years can be attributed to the gargantuan success of an exchange-traded fund that made it easy for investors to pile into the precious metal. If the tide turns, though, they could easily pile out.

Active exchange-traded funds -- a sort of hybrid between a regular ETF and a mutual fund -- were supposed to give investors the best of both worlds. But these newfangled ETFs have so struggled to find their place. Some pros, however, still see a bright future.

The Equity Precious Metals category of ETFs has attracted substantial investment inflow over the last year. That has fueled the creation of new funds, including one that gives investors access four precious metals in one trade.

Shares of silver are up 40% this year, compared to just over 20% for gold. But a statement from the Commodity Futures Trading Commission on Tuesday could rattle prices and investors considering adding silver to their portfolios.

Yields on emerging-market debt funds and ETFs are certainly enticing these days, especially compared to U.S. Treasurys. Also attractive are the added benefits of portfolio diversification and currency appreciation. But the risks can't be overlooked.

Amid all the whining about residential and commercial real estate markets, exchange-traded funds comprising real estate investment trusts have quietly been kicking butt. They're up 22% year-to-date through Sept. 21, compared to 3.71% for the the S&P 500 stock index.

The big attraction of master limited partnerships is tax-favored dividends. MLPs can be generous -- now around 6% to 10% -- because they don't have to pay federal income taxes if they pay out most of their cash flow to shareholders. But, alas, they're not for everyone.

The first half of 2010 has been anything but dull for exchange-traded fund investors. ETF assets in the U.S. decreased 0.4% to $772 billion as of June 30, but that actually indicates a serious inflow of cash: Equity markets, as measured by the S&P 500, fell 8.9% during the period.