ETF Deathwatch kicks off the new year with 468 exchange-traded funds (“ETFs”) and exchange-traded notes (“ETNs”) on the endangered list. This month’s lineup has 24 new members, while 20 came off due to improved health, and three were closed and liquidated in December. The current roster contains 373 ETFs and 95 ETNs. From a percentage perspective, this works out to 21% of all ETFs and 50% of all ETNs being on Deathwatch.
Making the word “the” part of an ETF’s name appears to be a new marketing trend—one that hasn’t proven to be successful. To date, there have been eight “the” ETFs launched in the U.S., and their track records have been less than stellar:
- Claymore U.S.-1 The Capital Markets ETF (former ticker UEM), closed 12/11/2009.
- The Restaurant ETF (former ticker BITE), closed 12/22/2016.
- The Health and Fitness ETF (FITS), added to Deathwatch this month.
- The Long-Term Care ETF (OLD), added to Deathwatch this month.
- The Obesity ETF (SLIM), added to Deathwatch this month.
- The Organics ETF (ORG), added to Deathwatch this month.
- The 3D Printing ETF (PRNT), becomes eligible for Deathwatch in February.
- The WEAR ETF (WEAR), becomes eligible for Deathwatch in July.
Granted, the trend is too new for a complete evaluation, and it might just take some time to turn things around. However, The Restaurant ETF closed less than 14 months after its launch, so it’s not clear that time is on their side.
Another recent trend noted among the new ETFs of 2016 was the proliferation of environmental, social, and governance (“ESG”) ETFs coming to market. In my opinion, sponsors seem to be in too much of a hurry to stake out their territory with ESG offerings. Most new offerings appear to be “me too” products attempting to ride a new marketing wave and fail to differentiate themselves. As a result, I expect to see an uptick in ESG products joining Deathwatch this year, starting with the three Columbia Sustainable ETFs this month.
The average asset level of products on ETF Deathwatch fell from $6.7 million to $6.6 million, and the quantity of products with less than $2 million in assets dropped from 94 to 88. The average age fell from 47.9 to 47.2 months, and the number of products more than 5 years of age decreased from 176 to 171. There are 445 funds on this list with at least one zero-volume day during December. Additionally, 208 ETFs and ETNs did not trade on the last day of the month, including 15 that went the entire month without a trade.
The two most extreme examples of zombie ETFs are the iPath Long Enhanced MSCI EAFE ETN (MFLA) and iPath Short Enhanced MSCI Emerging Markets ETN (EMSA). Neither one posted a single trade in calendar year 2016. MFLA is being quoted today with a bid of $77.84 and an asking price of $233.50. EMSA is slightly better with a bid of $34.82 and an asking price of $104.44. These two should be prime candidates for forced delistings.
Here is the Complete List of 468 ETFs and ETNs on ETF Deathwatch for January 2017 compiled using the objective ETF Deathwatch Criteria.
The 24 ETFs added to ETF Deathwatch for January:
- Columbia Sustainable Global Equity Income (ESGW)
- Columbia Sustainable International Equity Income (ESGN)
- Columbia Sustainable U.S. Equity Income (ESGS)
- DB Crude Oil Short ETN (SZO)
- Deutsche X-trackers Russell 2000 Comprehensive Factor (DESC)
- Direxion Daily High Yield Bear 2x (HYDD)
- ELEMENTS Rogers ICI Energy ETN (RJN)
- ETRACS 2x Wells Fargo BDC Series B ETN (LBDC)
- Guggenheim S&P 100 Equal Weight (OEW)
- IQ Hedge Market Neutral Tracker (QMN)
- iShares Fallen Angels USD Bond (FALN)
- iShares iBoxx $ High Yield ex Oil & Gas Corp Bond (HYXE)
- iShares MSCI China A (CNYA)
- ProShares UltraShort Gold Miners (GDXS)
- PureFunds Drone Economy Strategy (IFLY)
- PureFunds Video Game Tech (GAMR)
- RBC S&P 500 Trend Allocator PR Index ETN (TALL)
- SPDR S&P Technology Hardware (XTH)
- The Health and Fitness ETF (FITS)
- The Long-Term Care ETF (OLD)
- The Obesity ETF (SLIM)
- The Organics ETF (ORG)
- WisdomTree Australia & New Zealand Debt (AUNZ)
- WisdomTree Global Hedged SmallCap Dividend (HGSD)
The 17 ETFs removed from ETF Deathwatch due to improved health:
- First Trust NASDAQ Clean Edge Smart Grid (GRID)
- First Trust SSI Strategic Convertible Securities (FCVT)
- Hartford Multifactor Emerging Markets (ROAM)
- iShares Currency Hedged MSCI ACWI ex U.S. (HAWX)
- John Hancock Multifactor Healthcare (JHMH)
- Oppenheimer Financials Sector Revenue (RWW)
- PowerShares FTSE RAFI Asia Pacific ex-Japan (PAF)
- PowerShares Russell Midcap Equal Weight (EQWM)
- PowerShares Zacks Micro Cap (PZI)
- ProShares Inflation Expectations (RINF)
- ProShares Short Euro (EUFX)
- SPDR MSCI EAFE StrategicFactors (QEFA)
- SPDR MSCI World StrategicFactors (QWLD)
- SPDR S&P International Materials (IRV)
- SPDR S&P International Technology (IPK)
- VanEck Vectors Morningstar International Moat (MOTI)
- WisdomTree Japan Hedged Capital Goods (DXJC)
The 3 ETFs removed from ETF Deathwatch due to delisting:
- Oppenheimer Navellier Overall A-100 Revenue (RWV)
- Pacer Autopilot Hedged European (PAEU)
- The Restaurant ETF (BITE)
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.