The 36 additions consisted of 27 ETFs and nine ETNs.  Three-quarters of them just came out of the six-month new product grace period.  Given the record number of new launches in 2011, the Deathwatch list seems likely to grow further in the coming months.

Only two of the ten funds coming off the list managed to do so gracefully.  iShares MSCI Ireland Capped Investable Market (EIRL) and Russell 2000 High Momentum ETF (SHMO) had increases in trading activity.  The other eight removals were all funds that closed in December.

The 268 current members consist of 201 ETFs and 67 ETNs.  The ETF count includes 17 of the 39 (44%) currently listed actively-managed funds.  The average age of products on the list is just under two years at 23.3 months, while assets average just $5.7 million each.

Typically, only a few products go an entire month with no trading activity.  For December, the number surged to seven and six of them came from the iPath brand.  For the third month in a row, iPath US Treasury 5-Year Bull ETN (DFVL) had no trading activity at all.  It would have been four calendar months but for a small trade on September 1, 2011.  DFVL’s inability to attract any volume is even more alarming given the fact that it represents one of the year’s best performing asset classes.  It is truly a zombie ETF.

iPath Long Enhanced MSCI EAFE Index ETN (MFLA) is not far behind, having last traded on October 4, 2011.  The other five products with zero activity for the month December were iPath Pure Beta Aluminum ETN (FOIL), iPath Pure Beta Energy ETN (ONG), iPath Pure Beta S&P GSCI-Weighted ETN (SBV), iPath Short Enhanced (-2x) MSCI EAFE Index ETN (MFSA), and Russell Small Cap Contrarian ETF (SCTR).

The 36 ETPs Added to ETF Deathwatch for January 2012:

1. AdvisorShares Madrona Domestic ETF (FWDD)
2. AdvisorShares Madrona Global Bond ETF (FWDB)
3. AdvisorShares Madrona International ETF (FWDI)
4. AdvisorShares Meidell Tactical Advantage ETF (MATH)
5. Credit Suisse Merger Arb Liquid 2x Monthly ETN (CSMB)
6. db-X MSCI Brazil Currency-Hedged Equity (DBBR)
7. db-X MSCI Canada Currency-Hedged Equity (DBCN)
8. db-X MSCI Emerging Markets Currency-Hedged Equity (DBEM)
9. db-X MSCI Japan Currency-Hedged Equity (DBJP)
10. Direxion Daily Agribusiness Bear 3x (COWS)
11. Direxion Daily Basic Materials Bear 3x (MATS)
12. Direxion Daily Healthcare Bear 3x (SICK)
13. Direxion Daily Healthcare Bull 3x (CURE)
14. Direxion Daily Total Market Bear 1x (TOTS)
15. EGShares Basic Materials GEMS ETF (LGEM)
16. EGShares Consumer Goods GEMS ETF (GGEM)
17. EGShares Consumer Services GEMS ETF (VGEM)
18. EGShares Health Care GEMS ETF (HGEM)
19. EGShares Industrials GEMS ETF (IGEM)
20. EGShares Technology GEMS ETF (QGEM)
21. EGShares Telecom GEMS ETF (TGEM)
22. EGShares Utilities GEMS ETF (UGEM)
23. ELEMENTS MLCX Biofuels ETN (FUE)
24. Global X Farming ETF (BARN)
25. Guggenheim ABC High Dividend ETF (ABCS)
26. iPath DJ-UBS Lead ETN (LD)
27. iPath EUR/USD Exchange Rate ETN (ERO)
28. iPath US Treasury 2-year Yield Bull ETN (DTUL)
29. IQ US Real Estate Small Cap ETF (ROOF)
30. Morgan Stanley Cushing MLP High Income ETN (MLPY)
31. Morgan Stanley S&P 500 Crude Oil ETN (BARL)
32. PowerShares Fundamental Pure Large Growth (PXLG)
33. PowerShares Global Nuclear Energy (PKN)
34. SPDR S&P International Energy (IPW)
35. UBS ETRACS Natural Gas Futures Contango ETN (GASZ)
36. UBS ETRACS Oil Futures Contango ETN (OILZ)

The 10 ETPs removed from ETF Deathwatch for January 2012:

1. HOLDRS Europe 2001 (EKH) closed
2. HOLDRS Internet Infrastructure (IIH) closed
3. HOLDRS Merrill Lynch Market 2000+ (MKH) closed
4. HOLDRS Wireless (WMH) closed
5. IQ Hong Kong Small Cap ETF (HKK) closed
6. IQ Taiwan Small Cap (TWON) closed
7. iShares MSCI Ireland Capped Investable Market (EIRL)
8. Jefferies|TR/J CRB Global Agriculture Equity (CRBA) closed
9. Jefferies|TR/J CRB Global Industrial Metals Equity (CRBI) closed
10. Russell 2000 High Momentum ETF (SHMO)

The ETF Deathwatch criteria produced the following list of 268 ETPs for January:

ETF Deathwatch for January 2012

Data sources:  Daily prices and volume of individual ETPs from Norgate Premium Data, AUM from the ETF Industry Association, and all other information compiled by Invest With An Edge.

Past issues of ETF Deathwatch are available here.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

It takes time for the market to absorb new products.  The rapid pace of ETP introduction in 2007 and early 2008 led to a peak in the number of products on Deathwatch about a year later in early 2009.  As launches slowed to a trickle in 2008 and 2009, the marketplace gradually absorbed the then listed products, and the Deathwatch list slowly shrank.

Now the pace has once again quickened, with 2011 already the most prolific year for new launches with a month to go.  Given the past relationship, the ETF Deathwatch count seems likely to grow in 2012.

December’s new additions fall into two groups.  Twenty-one of the new names are from those reaching first-time eligibility at six months since launch.  Deathwatch excludes products that haven’t reached that age to give them time to attract investors.  Eighteen other products introduced in May did generate enough investor attention to avoid Deathwatch status.

The second group consists of fourteen ETPs that have been around a while, but are losing assets, facing reduced trading activity, or both.

Just four came off the list.  One was due to an extreme makeover that changed its name, ticker, objective, and manager.  Instead of closing one fund and releasing a new one, AdvisorShares transformed the actively managed AdvisorShares Mars Hill Global Value ETF (GRV) into the AdvisorShares Accuvest Global Long Short ETF (AGLS).  Unfortunately for AGLS, it is technically not a new fund and therefore forfeits its six-month exclusion.  It joins the list this month replacing GRV, its previous incarnation.

Three products had zero volume in November:  iPath Long Enhanced MSCI EAFE Index ETN (MFLA), iPath Long Extended Russell 1000 TR Index ETN (ROLA), and iPath US Treasury 5-Year Bull ETN (DFVL).  As you may recall, in our November ETF Deathwatch, DFVL was noted as being the only product with zero volume in October.  As far as we know, this is the only product to have gone two consecutive months with no trades.  Investor demand appears not to be the reason Barclays brought DFVL to market in July, but the real reason remains elusive.

The 21 ETPs added to ETF Deathwatch that just reached six months of age:

1. First Trust Mega Cap AlphaDEX Fund (FMK)
2. First Trust NASDAQ Global Auto Index (CARZ)
3. Global X Auto ETF (VROM)
4. Global X Fishing Industry ETF (FISN)
5. Global X Food ETF (EATX)
6. Global X Mexico Small-Cap ETF (MEXS)
7. IQ Global Oil Small Cap ETF (IOIL)
8. IQ Hong Kong Small Cap ETF (HKK)
9. Market Vectors LatAm Aggregate Bond ETF (BONO)
10. PowerShares Convertible Securities Portfolio (CVRT)
11. PowerShares DB 3x Short USD Index Futures ETN (UDNT)
12. Russell 1000 High Momentum ETF (HMTM)
13. Russell 1000 High Volatility ETF (HVOL)
14. Russell 1000 Low Beta ETF (LBTA)
15. Russell 2000 High Beta ETF (SHBT)
16. Russell 2000 High Momentum ETF (SHMO)
17. Russell 2000 Low Beta ETF (SLBT)
18. Russell 2000 Low Volatility ETF (SLVY)
19. Russell Aggressive Growth ETF (AGRG)
20. Russell Contrarian ETF (CNTR)
21. Russell Low P/E ETF (LWPE)

The 14 “established” ETPs added to ETF Deathwatch:

1. AdvisorShares Accuvest Global Long Short ETF (AGLS)
2. First Trust Brazil AlphaDEX Fund (FBZ)
3. First Trust US IPO Index Fund (FPX)
4. iPath DJ-UBS Aluminum ETN (JJU)
5. iShares FTSE NAREIT Industrial/Office Capped (FNIO)
6. iShares FTSE NAREIT North America (IFNA)
7. Jefferies|TR/J CRB Global Agriculture Equity (CRBA)
8. Market Vectors Investment Grade Floating Rate (FLTR)
9. PowerShares Fundamental Pure Large Core (PXLC)
10. PowerShares Global Wind Energy (PWND)
11. ProShares Ultra Russell 1000 Value (UVG)
12. Vanguard Russell 2000 Value ETF (VTWV)
13. WisdomTree LargeCap Growth (ROI)
14. WisdomTree Middle East Dividend (GULF)

The 4 ETPs removed from ETF Deathwatch:

1. AdvisorShares Mars Hill Global Value ETF (GRV)
2. Direxion Daily Latin America Bear 3x (LHB)
3. PowerShares DB Commodity Short ETN (DDP)
4. iShares MSCI USA Index Fund (EUSA)

The ETF Deathwatch criteria produced the following list of 242 ETPs for December:

ETF Deathwatch for December 2011

Data sources:  AUM from National Stock Exchange, daily prices and volume of individual ETPs from Norgate Premium Data, and all other information compiled by Invest With An Edge.

Past issues of ETF Deathwatch are available here.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

It appears the huge jump in the number of products now fighting for their survival is a direct result of the record pace of exchange traded product launches this year.  The 275 new arrivals during the first ten months of the year are more than the market can absorb. 

This is the first month of ETF Deathwatch eligibility for the 43 products introduced in April, as all new funds receive a six-month grace period to give them time to gain traction with investors.  Only a dozen of those April launches are currently showing any promise, with the remaining 31 moving directly onto ETF Deathwatch.  The six other funds joining the list have been around a while longer but have suffered a recent drop in assets or trading activity.

Barclay’s iPath ETNs account for nearly half of the new additions, including 16 of the new “pure beta” commodity ETNs along with two others.  First Trust also has a large percentage of the new names this month.

Another Barclay’s product, the iPath US Treasury 5-Year Bull ETN (DFVL), has the dubious distinction of being the only ETP with zero volume for the month of October.  It was launched in July and is currently too young to be included in ETF Deathwatch, but a month with zero volume pretty much seals its fate.

The 37 ETPs added to ETF Deathwatch:

1. AdvisorShares Mars Hill Global Relative Value (GRV)
2. FactorShares 2X: S&P500 Bull/USD Bear (FSU)
3. First Trust Asia Pacific Ex-Japan AlphaDEX (FPA)
4. First Trust China AlphaDEX Fund (FCA)
5. First Trust Europe AlphaDEX Fund (FEP)
6. First Trust Japan AlphaDEX (FJP)
7. First Trust Latin America AlphaDEX (FLN)
8. First Trust Mid Cap Value AlphaDEX (FNK)
9. First Trust Small Cap Value AlphaDEX (FYT)
10. First Trust South Korea AlphaDEX (FKO)
11. Global X Waste Management ETF (WSTE)
12. iPath Pure Beta Agriculture ETN (DIRT)
13. iPath Pure Beta Aluminum ETN (FOIL)
14. iPath Pure Beta Broad Commodity ETN (BCM)
15. iPath Pure Beta Cocoa ETN (CHOC)
16. iPath Pure Beta Coffee ETN (CAFE)
17. iPath Pure Beta Copper ETN (CUPM)
18. iPath Pure Beta Cotton ETN (CTNN)
19. iPath Pure Beta Crude Oil ETN (OLEM)
20. iPath Pure Beta Energy ETN (ONG)
21. iPath Pure Beta Grains ETN (WEET)
22. iPath Pure Beta Industrial Metals ETN (HEVY)
23. iPath Pure Beta Lead ETN (LEDD)
24. iPath Pure Beta Nickel ETN (NINI)
25. iPath Pure Beta Precious Metals ETN (BLNG)
26. iPath Pure Beta S&P GSCI-Weighted ETN (SBV)
27. iPath Pure Beta Softs ETN (GRWN)
28. iPath Seasonal Natural Gas ETN (DCNG)
29. iPath US Treasury Steepener ETN (STPP)
30. Market Vectors Germany Small-Cap ETF (GERJ)
31. Market Vectors Russia Small-Cap ETF (RSXJ)
32. ProShares Ultra High Yield (UJB)
33. ProShares Ultra Investment Grade Corporate (IGU)
34. ProShares UltraShort 3-7 Year Treasury (TBZ)
35. RevenueShares Financials Sector Fund (RWW)
36. UBS ETRACS 1x Mthly Short Alerian MLP ETN (MLPS)
37. UBS ETRACS Wells Fargo BDC ETN (BDCS)

The 12 ETPs removed from ETF Deathwatch:

1. Direxion Airline Shares (FLYX) [FLYX fails to fly and is delisted 10/10/11]
2. Guggenheim Ocean Tomo Growth Index ETF (OTR)
3. iPath JPY/USD Exchange Rate ETN (JYN)
4. iShares 10+ Year Government/Credit Bond (GLJ)
5. iShares S&P Target Date 2010 Index Fund (TZD)
6. iShares S&P Target Date 2015 Index Fund (TZE)
7. iShares S&P Target Date 2025 Index Fund (TZI)
8. PowerShares DB 3x Long 25+ Treasury ETN (LBND)
9. PowerShares Fundamental Pure Small Core (PXSC)
10. SPDR S&P International Financial (IPF)
11. UBS ETRACS S&P 500 Gold Hedged Index ETN (SPGH)
12. WisdomTree Dreyfus Japan Yen (JYF)

The ETF Deathwatch criteria produced the following list of 211 ETPs for November:

ETF Deathwatch for November 2011

Data sources:  AUM from National Stock Exchange, daily prices and volume of individual ETPs from Norgate Premium Data, and all other information compiled by Invest With An Edge.

Past issues of ETF Deathwatch are available here.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

It was the first month of eligibility for 24 of the new additions, since new launches receive a six-month grace period to gain traction with investors.  The fact that nearly two-thirds of the 38 products introduced in March 2011 went on ETF Deathwatch as soon as they were eligible doesn’t speak very well for that monthly vintage.  A full 14 of the new additions are from FocusShares, a firm making its second attempt to break into the ETF business.

The average fund on the list is 28.8 months old and has $6.2 million in assets.  Seven products have only about $1 million under management.  ELEMENTS Spectrum Large Cap US Sector Momentum (EEH) had zero volume in September. 

The 29 ETPs added to ETF Deathwatch:

1. Direxion Daily 7-10 Year Treasury Bear 1x (TYNS) [Direxion inverse bond ETFs]
2. Direxion Daily 20+ Year Treasury Bear 1x (TYBS)
3. First Trust NASDAQ CEA Smartphone (FONE) [ETF FONE Home]
4. Focus Morningstar Basic Materials Index ETF (FBM) [FocusShares Rides Again]
5. Focus Morningstar Communication Services ETF (FCQ)
6. Focus Morningstar Consumer Cyclical ETF (FCL)
7. Focus Morningstar Consumer Defensive ETF (FCD)
8. Focus Morningstar Energy Index ETF (FEG)
9. Focus Morningstar Financial Services ETF (FFL)
10. Focus Morningstar Health Care Index ETF (FHC)
11. Focus Morningstar Industrials Index ETF (FIL)
12. Focus Morningstar Large Cap Index ETF (FLG)
13. Focus Morningstar Mid Cap Index ETF (FMM)
14. Focus Morningstar Real Estate Index ETF (FRL)
15. Focus Morningstar Small Cap Index ETF (FOS)
16. Focus Morningstar Technology Index ETF (FTQ)
17. Focus Morningstar Utilities Index ETF (FUI)
18. Global X FTSE Andean 40 ETF (AND) [Chile, Colombia, and Peru ETF]
19. Global X FTSE Argentina 20 ETF (ARGT) [ARGT launch]
20. Global X Oil Equities ETF (XOIL) [XOIL tries to track spot]
21. Global X Pure Gold Miners ETF (GGGG) [GGGG initial review]
22. Global X S&P/TSX Venture 30 Canada ETF (TSXV) [Access to Toronto Venture Exchange]
23. iPath Long Ext 3x S&P 500 TR Index ETN (SFLA)
24. Market Vectors Colombia ETF (COLX) [COLX uses cash creations]
25. PowerShares DB Japanese G-Bond Futures ETN (JGBL) [PowerShares DB Bond ETNs]
26. PowerShares DB 3x Japanese G-Bond Futures ETN (JGBT)
27. PowerShares Dynamic Banking (PJB)
28. ProShares Short Investment Grade Corporate (IGS) [IGS launch article]
29. ProShares Ultra Telecommunications (LTL)

The six ETPs removed from ETF Deathwatch:

1. ELEMENTS MLCX Biofuels ETN (FUE)
2. iPath Short Ext -3x S&P 500 TR Index ETN (SFSA)
3. JETS Contrarian Opportunities (JCO) [shuttered in September]
4. ProShares Ultra Yen (YCL)
5. PowerShares Active Alpha Multi-Cap (PQZ) [delisted after 9/30/11]
6. PowerShares DB Base Metals Short ETN (BOS)

The ETF Deathwatch criteria produced the following list of 186 ETPs for October:

ETF Deathwatch for October 2011

Data sources:  AUM from National Stock Exchange, daily prices and volume of individual ETPs from Norgate Premium Data, and all other information compiled by Invest With An Edge.

Past issues of ETF Deathwatch are available here.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

Four products escaped the list simply because they no longer exist.  These perpetual members of ETF Deathwatch have been closed and liquidated:

1. ELEMENTS Benjamin Graham Large Cap Value ETN (BVL) [Ben Graham ELEMENTS ETNs Closing]
2. ELEMENTS Benjamin Graham Small Cap Value ETN (BSC)
3. ELEMENTS Benjamin Graham Total Market Value ETN (BVT)
4. FaithShares Christian Values Fund (FOC)

Six ETPs had substantial increases in assets and trading activity the past three months, leaving the list more honorably:

1. BLDRS Europe 100 ADR (ADRU)
2. iPath Short Enhanced -2x MSCI Emerging Markets ETN (EMSA)
3. iShares 2016 S&P AMT-Free Muni Series (MUAE)
4. iShares FTSE NAREIT North America (IFNA)
5. SPDR S&P International Health Care (IRY)
6. VelocityShares Daily 2x VIX Medium-Term ETN (TVIZ)

New ETFs receive a six-month grace before they are eligible for ETF Deathwatch.  This gives them a fair chance gain traction with investors.  Five of the 14 new ETPs launched in February blew their chance and now join the ETF Deathwatch.  Also,  five older ETFs were added because of a drop off in assets and/or trading:

1. FactorShares 2X: Oil Bull/S&P500 Bear (FOL) [FactorShares Introduces Spread Trading In ETF Wrapper]
2. FactorShares 2X: S&P500 Bull/TBond Bear (FSE)
3. FactorShares 2X: TBond Bull/S&P500 Bear (FSA)
4. Global X China Industrial ETF (CHII) [Global X Launches 2 of 6 Planned China Sector ETFs]
5. iShares MSCI Emerging Markets Materials (EMMT) [iShares Begins Rollout of 4 New International Sector ETF Suites]
6. iShares S&P Global Nuclear Energy (NUCL)
7. PowerShares Fundamental Pure Mid Core (PXMC) [Ticker Changes for PowerShares ETFs]
8. PowerShares MENA Frontier Countries (PMNA)
9. ProShares UltraShort TIPS (TPS) [Shorting Inflation Protection with TPS]
10. Teucrium Natural Gas Fund (NAGS) [Teucrium Natural Gas Fund Now Trading]

With the demise of the ELEMENTS Benjamin Graham ETNs, other products now compete for the title “Listed Product with the Least Assets.”  ELEMENTS Spectrum Large Cap Sector US Momentum ETN (EEH) and Market Vectors Double Long Euro ETN (URR) each have only a little over $1 million in assets, the least among those on the market for more than six months.

The now defunct ELEMENTS Benjamin Graham ETNs were also notorious for having some of the smallest trading activity.  For August, that honor was shifted to ELEMENTS Spectrum Large Cap Sector US Momentum ETN (EEH) that traded on only four days during the month for a total of fewer than 1700 shares (about 73 shares per day).

The ETF Deathwatch criteria produced 163 names for September.  Here is the complete list:

ETF Deathwatch for September 2011

Data sources:  AUM from National Stock Exchange, daily prices and volume of individual ETPs from Norgate Premium Data, and all other information compiled by Invest With An Edge.

Past issues of ETF Deathwatch are available here.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

Many people are surprised to learn that one of the members is the PIMCO Broad U.S. Treasury Index Fund (TRSY).  Despite having a PIMCO name and targeting a broad asset class, TRSY went the entire month of July with zero volume.  Earlier today, the bid/ask spread was 45 cents on a price of around $103.  TRSY easily wins our “least traded product” award for July.

The product with the least assets once again goes to ELEMENTS Ben Graham Large Cap Value ETN (BVL), a distinction it has held for many months.  With less than $600,000 under management, BVL is generating less than $4,500 in fees.  One can’t help but wonder what is motivating Merrill Lynch and Deutsche Bank to keep this product alive.

New ETFs receive a six-month grace period before becoming eligible for ETF Deathwatch to give them time to gain traction with investors.  Five of the 22 new ETPs launched in January failed to draw much interest so far and are joining ETF Deathwatch this month:

• ESG Shares Pax MSCI EAFE ESG Index ETF (EAPS) – we identified this ETF as being suspect when launched 
• Global X Aluminum ETF (ALUM) – this aluminum producers fund is struggling right along with aluminum futures products
• Global X Russell Emerging Markets Value ETF (EMVX) – both EMVX and EMGX appear to be based on solid concepts, but perhaps the market is not ready for them
• Global X Russell Emerging Markets Growth ETF (EMGX)
• Rydex MSCI All Country World Equal Weight (EWAC) – the success of Rydex S&P Equal Weight (RSP) does not automatically transfer to other indexes