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ETFs have become a key tool for traders and investors alike. In fact, many investors use fund flows in the ETF space to get a feel for where the big money is moving on Wall Street.

With this in mind, we've created a new report capturing the largest creation/redemption activity in the ETF space. The report will be published each Tuesday (Wednesday on holiday weeks).

Largest Net Creations

The Select Sector SPDR—Energy ETF (NYSEARCA:XLE) saw that largest creation activity for the week ending December 28, 2007, with $1.29 billion in new shares created—a sign that investors expect good things to continue for the energy patch in 2008.

The energy fund was followed by a handful of broad market ETFs, including the iShares Russell 2000 (NYSEARCA:IWM), the iShares MSCI EAFE (NYSEARCA:EFA) and iShares MSCI Emerging Markets (NYSEARCA:EEM) ETFs.

Digging down further, two gold funds make it onto the top 20—the streetTRACKS Gold Trust (NYSEARCA:GLD) and the Market Vectors Gold Miners ETF (NYSEARCA:GDX)—possibly in response to the assassination of Benazir Bhutto in Pakistan and the search for "safe haven" assets.

The iShares Nasdaq Biotech (NASDAQ:IBB) and Vanguard Total Bond Market (NYSEARCA:BND) make somewhat surprising appearances on the list—both rank high in the top 20 despite relatively low net asset counts ($1.5 and 1.0 billion, respectively).

Top 20 ETFs By Creation Activity - Week Ending December 28, 2007

Fund

Ticker

Creations

Dollar Value

Select Sector SPDR-Energy

XLE

16,050,000

$1,288,000,000

iShares Russell 2000

IWM

16,250,000

$1,248,000,000

iShares MSCI-EAFE

EFA

9,000,000

$712,000,000

iShares MSCI-Emerging Markets

EEM

4,650,000

$708,000,000

Vanguard Total Market

VTI

4,221,000

$617,000,000

iShares Nasdaq Biotech

IBB

3,950,000

$324,000,000

streetTRACKS Gold Trust

GLD

3,400,000

$282,000,000

Vanguard Total Bond Market

BND

3,500,000

$267,000,000

DJIA DIAMONDS

DIA

1,850,000

$247,000,000

iShares Lehman 1-3 Year Treasury Bond

SHY

2,200,000

$180,000,000

iShares Russell 1000 Value

IWD

1,750,000

$142,000,000

Market Vectors Gold Miners ETF

GDX

2,250,000

$105,000,000

iShares Russell 1000

IWB

1,250,000

$101,000,000

SPDR S&P Retail ETF

XRT

2,600,000

$88,000,000

Vanguard Small-Cap ETF

VB

1,240,000

$85,000,000

PowerShares WilderHill Clean Energy

PBW

2,500,000

$70,000,000

iShares Russell 2000 Value

IWN

900,000

$64,000,000

PowerShares DB Agriculture Fund

DBA

1,800,000

$59,000,000

Market Vectors--Agribusiness ETF

MOO

1,000,000

$57,000,000

S&P 400 MidCap SPDR

MDY

350,000

$55,000,000

Data from AMEX.



Largest Net Redemptions

In terms of net redemptions, investors pulled lots of money out of the two large S&P 500 ETFs last week. The S&P 500 SPDR (NYSEARCA:SPY) lost nearly $6 billion in redemption activity, while the iShares S&P 500 lost $1.8 billion.

The No. 3 fund on the list is the iShares Dow Jones Select Dividend Index (NYSEARCA:DVY). That fund is trading at a 52-week low, and a likely explanation for the outflows is that investors were trying to harvest their losses in the fund before the end of 2007. Tax-loss selling is probably to blame for the pull-out in the KBW Regional Banking ETF (NYSEARCA:KRE), among others, as well.

Top 20 ETFs By Redemption Activity - Week Ending December 28, 2007

Fund

Ticker

Redemptions

Dollar Value

S&P 500 SPDR

SPY

(40,100,000)

($5,919,200,000.00)

iShares S&P 500

IVV

(12,300,000)

($1,818,700,000.00)

iShares Dow Jones Select Dividend Index

DVY

(11,800,000)

($767,500,000.00)

PowerShares QQQ Trust

QQQQ

(11,750,000)

($608,500,000.00)

Select Sector SPDR-Industrial

XLI

(6,350,000)

($250,200,000.00)

Select Sector SPDR-Health Care

XLV

(5,050,000)

($179,600,000.00)

iShares FTSE/Xinhua China 25

FXI

(800,000)

($137,800,000.00)

KBW Regional Banking

KRE

(3,600,000)

($132,800,000.00)

iShares Russell 2000 Growth

IWO

(1,550,000)

($131,000,000.00)

United States Oil Fund LP

USO

(1,500,000)

($114,100,000.00)

iShares Lehman 20+ Year Treasury Bond

TLT

(1,200,000)

($110,900,000.00)

Vanguard Mid-Cap

VO

(1,298,000)

($98,800,000.00)

Select Sector SPDR-Materials

XLB

(2,350,000)

($98,700,000.00)

Ultra QQQ ProShares

QLD

(825,000)

($83,600,000.00)

iShares DJ US Real Estate

IYR

(1,200,000)

($78,600,000.00)

Vanguard Extended Market

VXF

(700,000)

($74,000,000.00)

Rydex S&P Equal Weight

RSP

(1,500,000)

($71,200,000.00)

iShares S&P MidCap 400/BARRA Value

IJJ

(650,000)

($52,100,000.00)

Select Sector SPDR-Financial

XLF

(1,500,000)

($43,400,000.00)

iShares S&P MidCap 400

IJH

(500,000)

($43,000,000.00)

Data from AMEX.

Source: ETF Fund Flows (Week Ending 12/28/07)