As 2009 beganto wind down, exchange-traded funds saw unprecedented numbers. The most impressive story of all was in emerging countries, the only markets in the world where GDP growth numbers were in the high single digits.

The MSCI-EAFE was up a whopping 80.2% year-to-date, through Nov. 30, while hot markets like Brazil (up 116.8%) and China (up 97.3%) led the race. Even Russia recovered from a brutal 2008 to finish the year strong, thanks to a decoupling of these markets from the embattled U.S.

"People began seeing a middle class growing in emerging markets and demand coming from inside their borders," says John Gabriel, ETF analyst at Morningstar. "Also, emerging markets tend to march to a different beat than developed international markets, which were very in sync with the U.S."

COMMODITY GROWTH

As the burgeoning middle classes in China and Latin America grew, so too did their demand for goods, contributing to a remarkable year for the commodities sector. Commodities, especially gold, also benefited significantly from the moves in the U.S. dollar. Flows into gold ETFs were $11 billion YTD, representing 44% of all commodity inflows. Another top commodity play, the Market Vectors Coal ETF, was up an astonishing 133.3% YTD.

CONFIDENCE BUILDS

The No. 1 performing sector was technology, up 53% year-to-date. An early cyclical sector, technology's performance and comparable inflows throughout the year reveal a consistent rise in confidence from the U.S. investor. "When things were looking grimmest, a lot of corporations were putting their IT purchases on hold," Gabriel notes. "Then, when things weren't as bad, companies began bracing for demand again and ramped up their manufacturing capacity." Tech companies also catered to the now more cautious investor, Gabriel notes, as companies like Apple, Google and Microsoft have some of the cleanest balance sheets in corporate America.

The next best sector was consumer discretionary, further cementing U.S. investors' belief in the economic recovery. The sector was up nearly 40% YTD, though this may say more about the lessons companies have learned about inventory management than it does about consumers' shopping habits.

In terms of flows, ETFs posted tremendously strong numbers, as investors continued to go from mutual funds and single stocks into baskets of securities. In November, U.S. ETFs raked in $50.3 billion, pushing assets to $739 billion-the highest ever month-end level.

The biggest benefactor of such record inflows was fixed-income ETFs, which took in more than $200 billion thus far in 2009. Flows were concentrated mostly in Treasury Inflation Protected Securities (TIPS) and in one- to three-year bond funds.

"It's a function of investors being cautious toward interest rate risk; the further out you are, the more sensitive you are to a rise in rates," Gabriel says.

HUNTING FOR INCOME

The trend of retirees and pre-retirees looking to fixed-income funds like bond ETFs to replace some of the income they lost during the financial meltdown, however, could come to a screeching halt next year, warns Dan Dolan, director of wealth management strategies at Select Sector SPDRs.

"The need for income is thriving," Dolan says, "and it will be interesting to see, as yields dry up, what investors will add to their portfolios in order to find that income somewhere else." Dolan predicts that many of these investors will turn to high-yielding equities next year.