Sector ETF suites have a tremendous barrier to entry: the entrenched SPDR Select Sector family. This suite of ETFs was introduced in 1998, and has enjoyed “first mover” status for nearly 18 years. Although Vanguard, iShares, First Trust, and PowerShares have successful products in this arena, the ETF graveyard is littered with sector suites that were not up to the challenge.
The PowerShares FTSE RAFI Sector ETFs shut down in 2009, as did the Claymore-Morningstar Super Sector ETFs. WisdomTree was quick to follow, jettisoning its international sector lineup in early 2010, and Rydex abandoned its 2X sector pairs later that year. The HOLDRS suite of 17 sector and industry funds delisted at the end of 2011, although Van Eck picked up a handful of them that are still trading today. In 2012, the Focus Morningstar sector suite closed, and PowerShares trimmed its sector lineup by six more funds. The EGShares suite of emerging-market sector ETFs went by the wayside in 2013, the iShares international sector suite bit the dust in 2014, and the iShares emerging-market sector ETFs were history by the end of the following year.
Given this landscape, it is not surprising to see 14 ETFs from two relatively new sector suites joining ETF Deathwatch this month. Additionally, they are all smart-beta multifactor funds. Nine of them represent the entire suite of iShares MSCI Multifactor Sector ETFs launched in May. There are only nine because iShares chose not to include Telecom or Real Estate ETFs. Granted, Real Estate wasn’t a full-fledged GICS sector at that time, but the impending September promotion of Real Estate to sector status was well-known in May. These ETFs have seen little to no inflows, and the current asset levels are mostly a reflection of the original seed money.
The other five multifactor sector ETFs joining Deathwatch are from John Hancock. One might make the argument that the marketplace is not yet ready for multifactor sector suites. If true, then the PowerShares FTSE RAFI suite of multifactor sector ETFs that came out in 2006 were really ahead of their time.
In all, 25 names were added to ETF Deathwatch for December, while 17 were removed. A dozen of those coming off the list were the result of increased assets, increased trading, or both. The other seven are now dead and buried. The last list of 2016 consists of 464 products (373 ETFs and 91 ETNs).
The average asset level of products on ETF Deathwatch fell from $6.9 million to $6.7 million, and the quantity of products with less than $2 million in assets grew from 88 to 94. The average age fell from 48.1 to 47.9 months, and the number of products more than 5 years of age decreased from 177 to 176. There are 446 funds on this list with at least one zero-volume day during November. Additionally, 237 ETFs and ETNs did not trade on the last day of the month, including 15 that went the entire month without a trade and two that haven’t posted a trade in more than a year.
Here is the Complete List of 464 ETFs and ETNs on ETF Deathwatch for December 2016 compiled using the objective ETF Deathwatch Criteria.
The 25 ETFs added to ETF Deathwatch for December:
- Bullmark LatAm Select Leaders (BMLA)
- First Trust Alternative Absolute Return Strategy (FAAR)
- Global X Health & Wellness Thematic (BFIT)
- Global X Longevity Thematic (LNGR)
- Global X Millennials Thematic (MILN)
- Guggenheim U.S. Large Cap Optimized Volatility (OVLC)
- iShares Edge MSCI Multifactor Consumer Discretionary (CNDF)
- iShares Edge MSCI Multifactor Consumer Staples (CNSF)
- iShares Edge MSCI Multifactor Energy (ERGF)
- iShares Edge MSCI Multifactor Financials (FNCF)
- iShares Edge MSCI Multifactor Healthcare (HCRF)
- iShares Edge MSCI Multifactor Industrials (INDF)
- iShares Edge MSCI Multifactor Materials (MATF)
- iShares Edge MSCI Multifactor Technology (TCHF)
- iShares Edge MSCI Multifactor Utilities (UTLF)
- John Hancock Multifactor Consumer Staples (JHMS)
- John Hancock Multifactor Energy (JHME)
- John Hancock Multifactor Healthcare (JHMH)
- John Hancock Multifactor Materials (JHMA)
- John Hancock Multifactor Utilities (JHMU)
- ProShares Short Oil & Gas (DDG)
- REX VolMAXX Long VIX Weekly Futures Strategy (VMAX)
- Sit Rising Rate (RISE)
- SPDR MSCI Canada StrategicFactors (QCAN)
- WisdomTree Korea Hedged Equity (DXKW)
The 12 ETPs removed from ETF Deathwatch due to improved health:
- ETRACS Alerian MLP Index Series B ETN (AMUB)
- First Trust Emerging Markets Local Bond (FEMB)
- First Trust Hong Kong AlphaDEX (FHK)
- First Trust South Korea AlphaDEX (FKO)
- First Trust Strategic Income (FDIV)
- iPath US Treasury 2-year Bear ETN (DTUS)
- JPMorgan Diversified Return Intl Currency Hedged (JPIH)
- PowerShares LadderRite 0-5 Year Corp Bond (LDRI)
- PowerShares S&P SmallCap Materials (PSCM)
- PureFunds ISE Mobile Payments (IPAY)
- SPDR MSCI Australia StrategicFactors (QAUS)
- WisdomTree Global SmallCap Dividend (GSD)
The 7 ETPs removed from ETF Deathwatch due to delisting:
- TrimTabs Intl Free-Cash-Flow (FCFI)
- SPDR MSCI International Real Estate Currency Hedged (HREX)
- SPDR MSCI Mexico StrategicFactors (QMEX)
- SPDR MSCI South Korea StrategicFactors (QKOR)
- SPDR MSCI Taiwan StrategicFactors (QTWN)
- ETFS Diversified-Factor Developed Europe (SBEU)
- ETFS Diversified-Factor U.S. Large Cap (SBUS)
Disclosure: Author has no positions in any of the securities mentioned and no positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) is received from, or on behalf of, any of the companies or ETF sponsors mentioned.