Exchange traded fund assets top $1 trillion for first time

Assets in exchange traded funds have broken above $1 trillion for the first time.
ETFs are portfolios of stocks, bonds or even commodities that trade on the stock exchanges. "When we see people moving to stock funds, they're not using conventional funds — they're using ETFs," says Tom Roseen, research manager at Lipper, which tracks the funds.

Investors put about $19 billion into ETFs in December and $122 billion in 2010, according to IndexUniverse.com. The largest ETF, SPDR S&P 500 ETF, tips the scales at $90 billion, making it the largest single share class of any stock fund and the fifth-largest in total assets.

ETFs have become popular because they're easy to move in and out of: You can buy or sell ETFs at any time during the trading day. With conventional funds, you get the end-of-day price, provided you place your order before the market closes.

Other popular features:

• Most ETFs are low-cost index funds, which ditch the fund manager and pass on the savings to you. Vanguard, which has made its reputation on providing low-cost funds, attracted $40.5 billion in ETF assets last year, more than any other competitor, IndexUniverse.com says.

• ETFs are available for nearly every type of asset class, from stocks to bonds to commodities.

Many of the most popular ETFs were the ones that scored the biggest gains.

•Emerging markets. Stock exchanges in new or lesser-developed countries soared last year, and so did the funds that invest in them. The average emerging-markets fund gained 19.5% in 2010. Vanguard Emerging Markets ETF, up 19.0%, also saw $19 billion in new assets last year.