Exchange-traded funds (ETFs) which track small United States stocks and select Asian benchmarks provided investors with the best returns among locally listed equity ETFs in 2010.
The iShares MSCI South Korea ETF was the top performer in the 12 months, rallying 16.52 per cent, according to data compiled by research house Morningstar.
The iShares Russell 2000 ETF of American small caps rallied 13.32 per cent, while the S&P MidCap 400 of medium-sized US companies jumped 12.61 per cent.
"Certainly the American economy has started to perform a bit better than expected and when that happens small caps tend to beat large caps," Morningstar's co-head of fund research Tim Murphy said.
Australian and other regional ETFs provided investors with weaker gains or provided negative returns.
The SPDR S&P/ASX 200 and Vanguard Australian Shares Index ETFs increased 0.04 per cent and 2.68 per cent, respectively.
The iShares S&P 500 ETF of US large caps gained 3.27 per cent, while the Vanguard US Total Market Shares Index ETF rallied 5.61 per cent.
The worst performing ETFs were the iShares Europe 350 and FTSE China 25, tumbling 8.73 per cent and 7.36 per cent.
The European ETF fell significantly because of the debt problems engulfing nations such as Portugal, Ireland, Greece and Spain, Murphy said.
"The Australian dollar has also strengthened against the euro, which has worsened the performance of the Europe 350 ETF because it is unhedged," he said.
"China underperformed because the government has stepped in to slow growth and control inflation, so that has affected the performance of stocks there."
