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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 (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 (IWM), the iShares MSCI EAFE (EFA) and iShares MSCI Emerging Markets (EEM) ETFs.

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

The iShares Nasdaq Biotech (IBB) and Vanguard Total Bond Market (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 (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 (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 (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)