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NEW YORK (Dow Jones)--Lots of niche players have tried their hand in the exchange-traded-fund business; almost none have proved as successful as Van Eck Associates Corp.

The New York-based company, which launched its first ETF three years ago, now oversees about $9.7 billion in a quirky--but also very volatile--lineup of more than 20 ETFs with themes ranging from gambling companies to alternative energy to investing in the Persian Gulf.

"Van Eck has done a great job of nibbling at the edges" of the ETF industry, says Morningstar analyst Scott Burns. "They give you unique exposures not available elsewhere."

While the ETFs business is booming, it's one that remains dominated by a handful of large players like Barclays PLC (BCS) and State Street Corp. (STT). Success has eluded many smaller companies. Of 26 exchange-traded-fund providers ranked by assets by the National Stock Exchange, Van Eck is sixth. Its annual ETF revenue, based on those funds' expense ratios, may exceed $50 million.

Van Eck's first ETF, Market Vectors Gold Miners ETF (GDX), which hit the market in May 2006, aims to help investors bet on gold through the stock market rather than by buying the metal directly, the approach taken by SPDR Gold Shares (GLD), a fund marketed by State Street that had appeared two years earlier. Van Eck's fund hasn't proved nearly as popular--SPDR Gold Shares now holds more than $35 billion--but it's proved popular enough. With gold prices on a tear, the gold miners ETF has a still-impressive $5 billion, making it by far Van Eck's biggest success.

Since then Van Eck has continued to pick its fights carefully. While both Van Eck and the fund industry giants it competes with offer narrowly focused funds, the giants tend to offer slates of ETFs that, taken together, cover the entire market. Van Eck's offerings are in no way comprehensive. For instance, while Van Eck offers ETFs that target Russia and small-company Brazilian stocks, it doesn't offer any that aim at Japan or Western Europe.

Although it may not be obvious at first glance, there is a certain method to Van Eck's madness. Before it entered the ETF business the company had a long history--it was founded in 1955--of managing investments in gold and other commodities. Most of the ETFs, whether they target emerging-markets stocks, coal, steel, or currencies, have some kind of tie-in to what the company's marketing materials call "hard assets."

While Van Eck's niche strategy seems to have succeeded in winning investor assets, it does open the company to the charge its funds are opportunistic or gimmicky, tempting investors to chase hot returns, a criticism that has dogged the ETF industry for years. Moreover, some of Van Eck's marketing tactics--such as distributing I-beam-shaped paper weights to promote its steel ETF and giving the agribusiness fund the ticker "MOO"--reinforce that image.

Many of Van Eck's funds, especially those that have seemed most impressive in 2009, have also proved extremely volatile in the past. The Market Vectors Coal ETF (KOL) has been a top performer this year, its value more than doubling in 2009. But investors that made money in the fund would have had to time the market just right. It the second half of last year it fell 75%.

Van Eck declined to comment.

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