What are the 5 largest Exchange-Traded Funds?

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(MoneyWatch) Exchange-traded funds have certainly been hot, and the five hottest since their inception tell us a lot about investor behavior. Let's take a look at the largest five, according to Index Universe.

1. SPDR S&P500 (SPY). The S&P 500 fund was the first index fund ever launched, so it might not come a as shocker that this State Street fund launched in 1993 is the industry leader, at $98.83 billion in assets and with an expense ratio of .09 percent. Since it misses out on mid- and small-cap stocks and must trade based on the actions of the Standard & Poor's committee, it is an illogical choice for investors but gives evidence to the power of inertia.

2. SPDR Gold (GLD). This State Street fund owns gold and comes in at $73.93 billion in assets with an expense ratio of 0.40 percent. The success of this fund is due to speculators coming in as a convenient way to own the hot metal. While I don't know what the price of gold will be in a couple of years, chasing performance has never been a great way to build wealth.

3. Vanguard MSCI Emerging Markets (VWO). This $54.96 billion Vanguard fund owns emerging market stocks and has an expense ratio of 0.20 percent. It's been growing more rapidly than the iShares counterpart due to its lower expenses. In my view, the success of this fund is due to investor misconception that faster growing countries translate to faster growing stock markets. Also, this fund will be changing indexes next year from MSCI to FTSE, and Korea will no longer be included.

4. iShares MSCI Emerging Markets (EEM). This $38.19 billion iShares fund follows the same index as the Vanguard fund above (for now) but has an expense ratio of 0.67 percent. This has grown for the same reason as the Vanguard emerging markets fund.

5. iShares MSCI EAFE (EFA). This iShares fund owns equities in Europe, Australia, and the Far East (EAFE). It excludes emerging markets and Canada. It is to international investing what the S&P 500 is to U.S. markets -- a good start at indexing. But better funds exist today. Inertia is a powerful force.

I don't own a penny of these five funds because there are better choices available. Vanguard, iShares and Schwab have very low-cost broad ETFs that own the total U.S. and total international stock markets, along with the total bond market. That encompasses the four out of five of these top five ETFs. As for owning gold, I still have what I bought in the gold bubble of 1979, which taught me the valuable lesson of why performance-chasing doesn't work.

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    Allan S. Roth is the founder of Wealth Logic, an hourly based financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of How a Second Grader Beats Wall Street, Roth teaches investments and behavioral finance at the University of Denver and is a frequent speaker. He is required by law to note that his columns are not meant as specific investment advice, since any advice of that sort would need to take into account such things as each reader's willingness and need to take risk. His columns will specifically avoid the foolishness of predicting the next hot stock or what the stock market will do next month.