Although February has the fewest trading days of any month, exchange-traded funds still racked up healthy inflows from investors. Inflows into US based ETFs and ETNs grew by $5.4 billion in February 2010.

Assets in exchange-traded funds and notes in the United States now top $765 billion, a gain of 66% over February 2009. In addition, the number of listed exchange-traded products grew from 843 to 964, well under the percentage change in assets, reflecting a trend of asset consolidation among the largest ETFs, according to a press release.

Fixed income investments remain the biggest breadwinners, taking in $2.3 billion in net inflows and continuing a trend of monthly inflows for more than a year. US stocks rebounded slightly from January’s $19.6 billion outflow to add $5.8 billion in February.

In the midst of the largest budget deficit in American history, lawmakers are becoming creative when it comes to new ways to generate revenue. One idea proposed by House member Peter DeFazio of Oregon would impose a sales tax on stock and ETF purchases.

The tax, which is meant to damper speculative investments and high-frequency trading, would cost investors .25% of the market price for each share purchased, MarketWatch reports. Estimates suggest the United States would generate at least $100 billion per year should the tax be enacted, but reduce overall stock market volume by 50%.

Although the new tax is not popular in a generally anti-tax, anti-spending political climate, the legislation currently has 27 co-sponsors in the House. The bill would exempt pension funds, mutual funds, education and health savings accounts, as well as the first $100,000 in annual transactions, although wealthy ETF investors would pay the tax after the exempted dollars are used.

Although 2010 continues show the promise of a recovery, what was hot in 2009 is appearing to cool as 2009’s losers become 2010’s big winners.

In 2009, gold had the Midas touch, but as the commodity markets cool from ebbing inflation fears, an unlikely candidate is leading the charge in the best performer category. Only 46 days into the new year, the U.S. Home Construction Index Fund (ITB: Quote, Profile, Advanced Chart, News) has posted the best unleveraged return year-to-date of 8.7%, according to MarketWatch. Improving housing starts, consumer confidence and subsidies for home purchases have fueled the ETF’s growth.

Investors look to the home construction industry to time peaks in home prices. Homebuilders peaked in 2005, well before residential prices, reflecting on the changing tide of the industry as a whole. The following chart illustrates ITB’s performance over the past year.

Capitalizing upon the precious metal trend, ETF Securities’ newest addition to its family of US commodity ETFs will blend holdings of various precious metals. The fund will buy physical gold, silver, platinum and palladium to back investors’ assets.

The ETFS Physical PM Basket Shares, as it will be named, will be created with a new trust, according to the Wall Street Journal. ETF Securities hopes to latch onto a growing trend in investing, with many investors seeking exposure to precious metals as an anti-inflationary play, regardless of the allocations.

Interestingly, in the SEC filing, ETF Securities specifically acknowledges that their purchase of physical metals for storage may temporarily drive up market prices.

What is good enough for individual investors is apparently good enough for governments. A fresh look into China’s holdings has revealed a staggering $9.6 billion invested in US traded ETFs.

Although most of the Chinese holdings are in pure indexing funds like the SPDR (SPY: Quote, Profile, Advanced Chart, News) and Powershares QQQ (QQQQ: Quote, Profile, Advanced Chart, News), the funds were also diverted into less traditional funds, such as the MarketVectors Gold Miners ETF (GDX: Quote, Profile, Advanced Chart, News).

China’s largest holding is the iShares S&P Global Materials Index Fund (MXI: Quote, Profile, Advanced Chart, News), which corresponds with its aggressive purchases of foreign commodity producers and comprises $254 of its nearly $10 billion portfolio, according to The Street.

China’s holdings showcase what individual investors have known for years: exchange-traded funds are a convenient and inexpensive way to buy a variety of stocks across whole sectors.