18 new exchange traded products (ETPs) launched in February: 17 ETFs and one ETN.  No products were delisted.  The number of US-listed products now stands at 965 (874 ETFs and 91 ETNs).

February ended the three-month streak where new product launches exceeded 20.  It was also the second month in a row with no closures, but that streak will not be extended as WisdomTree plans to close 10 funds in March.

Notional trading of ETPs hit $1.420 trillion in February, up +4.6% from $1.357 trillion in January.  Trading in SDPR S&P 500 (SPY) exceeded $478 billion for the month, accounting for 33.7% of all ETP value traded.

82 products (8.5%) had an average daily value traded (ADVT) of $100 million or more.  There were 104 (10.8%) in the ETF Deathwatch classification (ADVT below $100,000 and more than six months on the market).

New products launched in February (in chronological order):

1. PIMCO Short Term Municipal Bond Strategy Fund (SMMU) (PIMCO Adds Short-Term Munis to ETF Menu)
2. ProShares UltraPro Dow30 (UDOW) (ProShares ETFs Go 3X)
3. ProShares UltraPro S&P MidCap400 (UMDD)
4. ProShares UltraPro QQQ (TQQQ)
5. ProShares UltraPro Russell2000 (URTY)
6. ProShares UltraPro Short Dow30 (SDOW)
7. ProShares UltraPro Short S&P MidCap400 (SMDD)
8. ProShares UltraPro Short QQQ (SQQQ)
9. ProShares UltraPro Short Russell2000 (SRTY)
10. GlobalShares FTSE Developed Countries ex US Fund (GSD) (Another Unneeded ETF from Old Mutual)
11. EGS INDXX China Infrastructure Index Fund (CHXX) (Emerging Global Launches China Infrastructure ETF)
12. Market Vectors Egypt Index ETF (EGPT) (Egypt Now Available to ETF Investors)
13. PowerShares CEF Income Composite Portfolio (PCEF) (Closed-End Funds Inside an ETF)
14. Credit Suisse Long/Short Liquid Index ETN (CSLS) (Do Not Buy CSLS)
15. EGS INDXX Brazil Infrastructure Index Fund (BRXX) (New Brazil Infrastructure ETF)
16. Direxion Daily 2-Year Treasury Bull 3x Shares (TWOL) (Leveraged & Inverse Short Term Bond ETFs)
17. Direxion Daily 2-Year Treasury Bear 3x Shares (TWOZ)
18. Sprott Physical Gold Trust (PHYS) (Now You Can Store Your Gold in Canada)

Product closures/delistings in February:

none

Previous monthly statistics reports are available here.

Disclosure covering writer, editor, publisher, and affiliates: 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.

The ETF industry and analysts are still struggling with their ability to count the number of ETFs and ETNs available at any given time.  The wide range of numbers found in various reports borders on absurdity.  StateStreet claims the year-end count was 819 ETFs, BlackRock puts it at 912 ETPs, and the industry’s own Investment Company Institute (ICI) places the count at the embarrassingly low number of 797.  I’ve seen analysts report the year-end count as low as 772, although most take the safe route of saying “more than 800″.

January was the third month in a row that new product launches exceeded 20, for a three month total of 73.  The last time that was accomplished was May-July 2008, when an impressive 97 new products were introduced.  Early 2009 (February-April) marked a low point for product introductions when only 14 came to market.

New products launched in January (in chronological order):

1. ETFS Physical Palladium Shares (PALL) (Launch of PALL & PPLT)
2. ETFS Physical Platinum Shares (PPLT)
3. iShares 2012 S&P AMT-Free Municipal Series (MUAA)  (New iShares Planned End-Date Muni Series)
4. iShares 2013 S&P AMT-Free Municipal Series (MUAB)
5. iShares 2014 S&P AMT-Free Municipal Series (MUAC)
6. iShares 2015 S&P AMT-Free Municipal Series (MUAD)
7. iShares 2016 S&P AMT-Free Municipal Series (MUAE)
8. iShares 2017 S&P AMT-Free Municipal Series (MUAF)
9. Global X China Materials ETF (CHIM) (Global X China Sector Suite Now Complete)
10. Schwab Emerging Markets Equity (SCHE) (Two International ETFs from Schwab)
11. Schwab International Small-Cap Equity (SCHC)
12. Jefferies | TR/J CRB Wildcatters Exploration & Production Equity ETF (WCAT) (Launch of WCAT)
13. ProShares Ultra 20+ Year Treasury (UBT) (Two New Leveraged Long Bond ETFs)
14. ProShares Ultra 7-10 Year Treasury (UST)
15. iShares MSCI ACWI ex US Financials Sector Index Fund (AXFN) (iShares Begins Rollout of 4 International Sector Suites and first 5 ETFs)
16. iShares MSCI Emerging Markets Financials Sector Index Fund (EMFN)
17. iShares MSCI Emerging Markets Materials Sector Index Fund (EMMT)
18. iShares MSCI Europe Financials Sector Index Fund (EUFN)
19. iShares MSCI Far East Financials Sector Index Fund (FEFN)
20. UBS E-TRACS S&P 500 Gold Hedged Index ETN (SPGH) (Do Not Buy SPGH)
21. Grail McDonnell Core Taxable Bond ETF (GMTB) (Two Active Bond ETFs from Grail)
22. Grail McDonnell Intermediate Municipal Bond ETF (GMMB)

Product closures/delistings in January:

none

Previous monthly statistics reports are available here.

Disclosure covering writer, editor, publisher, and affiliates: 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.

Unlike stocks, ETFs have a creation/redemption process that allows the addition of new shares to meet increased demand.  Likewise, ETF shares can be retired (redeemed) when demand wanes.  This feature increases ETF liquidity far beyond the level of stocks with similar trading volume.  The full extent of that increase is subject to debate.

While the creation/redemption process is a significant factor for ETF liquidity, there are other factors as well.  For example, the bid/ask spread of the underlying stocks and whether or not the stock exchange of the underlying stock is open can have a huge impact on liquidity.  Additionally, with more than 900 ETFs, market makers can’t keep up with them all, and many with lower volume get ignored.

Although it is not an all-encompassing approach to measuring liquidity, using ADVT to divide ETFs into liquidity tiers is a reasonable way to gauge ETF relative liquidity.  ETFs with an ADVT of less than $1,000 dollars (yes, there is such a group) comprise Tier 1.  At the other extreme is Tier 9, ETFs that trade more than $10 billion per day.  Each intervening tier represents an order of magnitude increase from the previous level.

These liquidity tiers apply only to ETFs for comparison to other ETFs.  It is not appropriate to compare ETFs to stocks using the same scale because of the differences in liquidity factors described above.

The graphic that accompanies this article shows each liquidity tier, along with the number of ETFs that make up a particular tier.  The information is derived from December 2009 trading data which has reduced volume due to the holidays.

Tiers 1, 2, and 3 are those with an ADVT of less than $100,000.  ETFs in these tiers often have days with zero volume and are included in my ETF Deathwatch if they are more than six months old.  These three tiers represent about 16% of the ETFs.

The largest is Tier 4 – ETFs trading between $100,000 and $1 million per day.  About 35% of the ETFs fall into this category.  Trading levels in this tier are often spotty, sometimes with only a handful of trades per day.  Traders should generally avoid these ETFs while investors should use limit orders.  When combined, Tiers 1-4 represent the majority (>51%) of ETFs, which is another way of saying that most ETFs have liquidity concerns.

Tiers 5, 6, and 7 represent increasing volume and value traded.  The bid/ask spreads are supported by deeper volume, and market makers are usually keeping an eye on trading price versus indicative value.  Depending on the size of your trades, market orders start to become a possibility for the 443 ETFs in these tiers.

Tiers 8 and 9 represent the best of the ETF world in terms of liquidity.  These are the members of the ETF Billion Dollar Club – the ETFs that garner the lion’s share of ETF trading.  There are typically about 16 ETFs in this category, fewer than 2% of all U.S. listed ETFs, but in December that number fell to just eight.

The combination of Tiers 7 – 9, all ETFs with an ADVT above $100 million, is a fairly close representation of the Vital Few – the 8% of ETFs that are responsible for 92% of ETF trading activity.

Disclosure covering writer, editor, publisher, and affiliates: 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.

The 2009 closures hit nine different brands, and five of those brands saw 100% of their product line vanish. NETS, SPA, BearLinx, AirShares, and MacroShares are all gone. Families and brands with partial closures include PowerShares (19 ETFs and one ETN), Claymore, and ELEMENTS.

ETF & ETN Closures of 2009

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Disclosure covering writer, editor, publisher, and affiliates: 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.

During 2009 there were a total 136 new ETP launches, consisting of 127 ETFs and 9 ETNs.  This was only the fourth largest number of new launches in a calendar year, falling below the levels of the previous three years and less than half of the 291 new introductions in 2007.

Delistings and closures numbered 56 (51 ETFs and 5 ETNs) for 2009.  This was the second largest on record, coming in just shy of the 58 delistings in 2008.

Notes: The ETF counts include MacroShares, which technically are not ETFs.  The new introductions and closings quantities do not include the XGC extreme makeover in July 2009.

New products launched in December (in chronological order):

1. Global X China Consumer ETF (CHIQ) (article on CHIQ and CHII)
2. Global X China Industrial ETF (CHII)
3. PIMCO Intermediate Municipal Bond Strategy Fund (MUNI) (article on MUNI)
4. Direxion Daily China Bear 3x Shares (CZI) (article on CZI, CZM, LHB, and LBJ)
5. Direxion Daily China Bull 3x Shares (CZM)
6. Direxion Daily Latin America 3x Bear Shares (LHB)
7. Direxion Daily Latin America 3x Bull Shares (LBJ)
8. Claymore China Technology ETF (CQQQ) (article on CQQQ)
9. GlobalShares FTSE Emerging Markets Fund (GSR) (article on GSR)
10. FaithShares Catholic Values Fund (FCV) (article on FCV, FOC, FMV, FZB, and FKL)
11. FaithShares Christian Values Fund (FOC)
12. FaithShares Methodist Values Fund (FMV)
13. Global X China Technology ETF (CHIB) (article on CHIB)
14. iShares 10+ Year Credit Bond Fund (CLY) (article on CLY and GLJ)
15. iShares 10+ Year Government/Credit Bond Fund (GLJ)
16. Global X China Financials ETF (CHIX) (article on CHIX)
17. Schwab U.S. Large-Cap Growth ETF (SCHG) (article on SCHG and SCHV)
18. Schwab U.S. Large-Cap Value ETF (SCHV)
19. FaithShares Baptist Values Fund (FZB) (article on FCV, FOC, FMV, FZB, and FKL)
20. FaithShares Lutheran Values Fund (FKL)
21. Global X China Energy ETF (CHIE) (article on CHIE)
22. SPDR Barclays Capital Short Term Corporate Bond ETF (SCPB) (article on SCPB)
23. WisdomTree International Hedged Equity Fund (HEDJ) (article on HEDJ)

Product closures/delistings in December:

1. Claymore/Morningstar Manufacturing Super Sector Index ETF (MZG) (article on MZG, MZN, MZO, and UEM)
2. Claymore/Morningstar Information Super Sector Index ETF (MZN)
3. Claymore/Morningstar Services Super Sector Index ETF (MZO)
4. Claymore U.S.-1 – The Capital Markets Index ETF (UEM)
5. MacroShares Major Metro Housing Down (DMM) (article on closure and a separate article on their expense ratio)
6. MacroShares Major Metro Housing Up (UMM)

Previous monthly statistics reports are available here.

Disclosure covering writer, editor, and publisher: Participating in DMM and UMM liquidation. 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.

In theory, each hundred new products should come quicker than the previous since it represents a smaller percentage increase.  However, it took 18 months for the list to grow from 800 to 900 while the climb from 700 to 800 took just four months.

In fact, the 400, 500, 600, 700, and 800 levels were all eclipsed during the 18-month period prior to the one just completed.  In other words, new listings grew at only 15% over the past 18 months versus more than 100% in the previous 18-month span.

Even with that dramatic decline in the growth rate, the number of new listings in November was the highest in twelve months.  This was still far below the record of 50 launched in January 2007.  The pace is picking up once again but remains well below the rapid climb we saw from 2006-2008 when the number of products increased by 279% (an annualized growth rate of 56% per year).

Notes: The ETF counts include MacroShares, which technically are not ETFs.  The new introductions and closings quantities do not include the XGC extreme makeover in July.

New products launched in November (in chronological order):

• PIMCO 3-7 Year U.S. Treasury Index ETF (FIVZ) (article on FIVZ and ZROZ)
• PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ)
• Schwab U.S. Broad Market ETF (SCHB) (article on Schwab launch)
• Schwab U.S. Large-Cap ETF (SCHX)
• Schwab U.S. Small-Cap ETF (SCHA)
• Schwab International Equity ETF (SCHF)
• TXF Large Companies ETF (TXF) (article on TXF)
• Market Vectors Junior Gold Miners ETF (GDXJ) (article on GDXJ)
• iShares Diversified Alternative Trust (ALT) (article on ALT)
• IQ ARB Merger Arbitrage ETF (MNA) (article on MNA, MINT, and BAB)
• PIMCO Enhanced Short Maturity Strategy Fund (MINT)
• PowerShares Build America Bonds Portfolio (BAB)
• First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID) (article on GRID)
• United States 12 Month Natural Gas Fund (UNL) (article on UNL)
• Barclays S&P 500 3x Long 2009 ETN+ (BXUB) (article on new ETN+ products)
• Barclays S&P 500 2x Long 2009 ETN+ (BXUC)
• Barclays S&P 500 1x Short 2009 ETN+ (BXDB)
• Barclays S&P 500 2x Short 2009 ETN+ (BXDC)
• Barclays S&P 500 3x Short 2009 ETN+ (BXDD)
• iShares S&P India Nifty 50 Index Fund (INDY) (article on INDY)
• Vanguard Short-Term Government Bond ETF (VGSH) (article on new Vanguard ETFs)
• Vanguard Intermediate-Term Government Bond ETF (VGIT)
• Vanguard Long-Term Government Bond ETF (VGLT)
• Vanguard Short-Term Corporate Bond ETF (VCSH)
• Vanguard Intermediate-Term Corporate Bond ETF (VCIT)
• Vanguard Long-Term Corporate Bond ETF (VCLT)
• Vanguard Mortgage-Backed Securities ETF (VMBS)
• Market Vectors Poland ETF (PLND) (article on PLND)

Product closures/delistings in November:

None

Previous ETF monthly statistics reports are available here.

Disclosure covering writer, editor, and publisher: Long GDXJ.  No positions in any of the other 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.

PIMCO 3-7 Year US Treasury Index Fund (FIVZ) and PIMCO 25+ Year Zero Coupon US Treasury Index Fund (ZROZ) became the 999^th and 1,000^th listed products today.

With PIMCO’s new funds, the number of active listings climbed to 882 (788 ETFs and 84 ETNs).  The 1,000 fund total includes the 118 products that have been delisted.

Please refer to our Monthly ETF Statistics and ETF Deathwatch publications for the most complete and accurate information on new product listings and closures.

Disclosure compliant with FTC 16 CFR Part 255 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.

The total value of shares traded for the month was $1.567 trillion, a surge of +19% from the $1.312 trillion of September.  ETF volume averaged 1.59 billion shares per day.  Trading in SPDR S&P 500 (SPY) averaged $21.7 billion per day, accounting for more than 30% of all ETF value traded.

Notes: The ETF counts include MacroShares, which technically are not ETFs.  The new introductions and closings quantities do not include the XGC extreme makeover in July.

New products launched in October (in chronological order):

1. RP Growth ETF (RPX) (article on RPX, RWG, RPQ, and RFF)
2. RP Focused Large Cap Growth ETF (RWG)
3. RP Technology ETF (RPQ)
4. RP Financials ETF (RFF)
5. iShares MSCI Emerging Markets Eastern Europe Index Fund (ESR) (article)
6. Claymore/AlphaShares China All-Cap ETF (YAO) (article)
7. Jefferies | TR/J CRB Global Agriculture Equity Index Fund (CRBA) (article on CRBA and CRBI)
8. Jefferies | TR/J CRB Global Industrial Metals Equity Index Fund (CRBI)
9. IQ CPI Inflation Hedged ETF (CPI) (article on CPI and GRES)
10. IQ ARB Global Resources ETF (GRES)
11. OOK, Inc. (OOK) (launch article and name article)
12. UBS E-TRACS DJ-UBS Commodity Index Total Return ETN (DJCI) (article)

Product closures/delistings in October:

None

Previous monthly statistics reports are available here.

Disclosure compliant with FTC 16 CFR Part 255 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.

ETF volume averaged 1.48 billion shares per day.  The total dollar value traded for the entire month was $1.312 trillion, a modest +1.8% increase from the typically slow month of August.  Trading in SPDR S&P 500 (SPY) averaged $18.8 billion per day, accounting for 30% of all ETF value traded.

Notes:  The ETF counts include MacroShares, which technically are not ETFs.  The quantity of new introductions and closings do not include the XGC extreme makeover in July.  Closed-end funds are not included.

New products launched in September (in chronological order):

1. PIMCO 15+ Year U.S. TIPS Index Fund (LTPZ) (article on LTPZ & TIPZ)
2. PIMCO Broad U.S. TIPS Index Fund (TIPZ)
3. ETFS Physical Swiss Gold Shares (SGOL) (article)
4. PIMCO 7-15 Year U.S. Treasury Index Fund (TENZ) (article)
5. Dent Tactical ETF (DENT) (article)
6. EGS Dow Jones Emerging Markets Financials Titans Index Fund (EFN) (article)
7. SPDR Wells Fargo Preferred Stock ETF (PSK) (article)
8. Jefferies | TR/J CRB Global Commodity Equity Index Fund (CRBQ) (article)
9. United States Short Oil Fund (DNO) (article)
10. SPDR S&P VRDO Municipal Bond ETF (VRD) (article)
11. iShares Russell Top 200 Index Fund (IWL) (article on IWL, IWX, & IWY)
12. iShares Russell Top 200 Value Index Fund (IWX)
13. iShares Russell Top 200 Growth Index Fund (IWY)

Product closures/delistings in September:

1. PowerShares DB Crude Oil Double Long ETN (DXO) (article)

ETF statistics reports for prior months are available here.

Disclosure: no positions

As anticipated in last month’s report, the total value of shares traded declined by -4.2% to just $1.289 trillion from the $1.346 trillion level in July.  ETF volume during the month averaged 1.47 billion shares per day, which is approximately 43% of the combined NYSE and Nasdaq average daily volume.

Notes: The ETF counts include MacroShares, which technically are not ETFs.  The quantity of new introductions and closings does not include the XGC extreme makeover in July.

New products launched in August:

• Market Vectors Vietnam ETF (VNM) (article)
• Global X FTSE Nordic 30 ETF (GXF) (article)
• ProShares Short 20+ Year Treasury (TBF) (article)
• PIMCO 1-5 Year TIPS Index Fund (STPZ) (article)

Previous monthly statistics reports are available here.

Disclosure: no positions