ETF Deathwatch – May 2009

May 4, 2009 by  
Filed under Commentary, ETF Deathwatch 2009

The number of exchange-traded products on Deathwatch decreased for the second month in a row.  It would be premature to declare that the peak is now behind us, because I would not be surprised to see additional recession-related declines in trading activity for some ETFs in the months ahead.  This month’s list contains 155 names, down from 162 last month and down from the record high of 171 for the March list. The current list consists of 114 ETFs and 41 ETNs that are at least six months old and failed to have an Average Daily Value Traded (ADVT) of at least $100,000 during April.

Elements Ben Graham Large Cap Value ETN (BVL) heads up the list this month with a pathetic 38 shares traded per day – an ADVT of just $242.  Closer inspection reveals that BVL only traded on five separate days in April, and its highest-volume day was just 200 shares.  The two other Elements Ben Graham products are on the list as well.  The second entry on the list is Barclays GEMS Asia 8 ETN (AYT) which only traded one day last month.  A grand total of 400 shares traded hands, all on April 7.

PowerShares has the largest number of products on the list with 37 (30 ETFs, 6 ETNs, and 1 BLDR), or nearly 24% of the list.  PowerShares took a step last Friday to improve their standing by announcing the closure of 19 ETFs.  However, only ten of those funds are on ETF Deathwatch.  That means that after the closures, there will still be 26 PowerShares products on ETF Deathwatch plus one BLDR, which is now sponsored by PowerShares.

Clearly, more than just trading activity goes into the decision of whether or not to close an ETF.  One potentially better gauge is assets under management (AUM) for the fund.  However, getting AUM data in a timely manner is tough, and then one would need to determine what percentage is “real investor” money versus “seed money” from the sponsor.  Nearly every fund on this list is composed primarily of the original seed money.  I have found that ADVT does a great job of pointing out where the problems are.

It has also been suggested that perhaps looking at the creation/redemption ratio can provide additional insights.  However, look again at the volume for the ETFs on this list, keeping in mind that most ETFs can only create new shares in blocks of 50,000 shares.  If an ETF is only trading 2,000 shares per day, then 25 days of trading volume are needed to create new shares, assuming that all 25 days of activity were “buy” oriented and drove demand for new share creation.  BVL would need more than five years of trading volume to equal one creation unit.  For the most part, there are no new shares be created or redeemed for the products on this list.

This brings up another point:  If there is not enough volume to justify the creation or redemption of shares, then it is not possible to keep the price aligned with the indicative value. The funds on this list are more likely than others to be trading at premiums and discounts to their value.

The fund’s sponsor also has a bearing on whether or not a given fund is ultimately closed.  For example, the iShares and SPDR products on the list have a reasonable chance of survival since they are part of broad and successful product lines.  Also, I don’t expect the four HOLDRS products on the list to liquidate anytime soon either.  Their expenses were covered years ago and the sponsor is just sitting back collecting the fees. I have them on this list to warn potential buyers that there are liquidity concerns with these products. The risk of liquidation might be lower than with other products, but you still have to wonder if someone is going to take the other side of your trade when it comes time for you to sell.

ETF Deathwatch - May 2009

RankTickerNameAge (mths)Avg Daily VolumeAvg Daily Value Traded
1BVLElements Ben Graham Large Cap Value ETN938$242
2AYTBarclays GEMS Asia 8 ETN819$828
3BVTElements Ben Graham Total Mkt Value ETN9171$1,171
4UBNE-TRACS CMCI Energy Total Return ETN13100$1,278
5PTDE-TRACS CMCI Short Platinum Exc Ret ETN1243$1,529
6MZOClaymore/Mrngstr Services SuperSector21138$1,822
7MZNClaymore/Mrngstr Inform. SuperSector21205$3,197
8USVE-TRACS CMCI Silver Total Return ETN13200$3,562
9UBDClaymore U.S. Capital Markets Bond ETF1581$3,683
10GBBiPath GBP/USD Exchange Rate ETN24100$3,979
11JFTFirst Trust Enhanced 130/30 Large Cap ETN11190$4,190
12PTRPPowerShares Glb Progressive Transport.7248$4,480
13STHClaymore/Sabrient Stealth32429$4,942
14BHHHOLDRS B2B Internet ETF11216,548$5,045
15EEHElements Spec LgCap US Sector Mo ETN21833$5,624
16JEMBarclays GEMS Currency Index ETN15143$5,725
17UBCE-TRACS CMCI Livestock Total Return ETN13300$5,773
18PWDPowerShares FTSE RAFI Europe Small Mid19638$7,001
19INRMarket Vectors Indian Rupee/USD ETN14200$7,001
20JJTiPath DJ AIG Tin ETN10281$7,702
21GWOElements CS Global Warming ETN131,605$8,131
22RTWRydex Inverse 2x S&P Technology11229$8,502
23CZAClaymore/Zacks Mid-Cap Core ETF25552$9,062
24GCEClaymore CEF Index GS Connect ETN17800$9,181
25FUEElements MLCX Biofuels ETN151,362$9,557
26OTRClaymore/Ocean Tomo Growth25624$10,787
27OTPClaymore/Ocean Tomo Patent29671$11,416
28IFEUiShares FTSE/EPRA NAREIT Europe18581$11,888
29JJSiPath DJ AIG Softs ETN10333$12,109
30IPUSPDR S&P International Utilities9776$14,086
31IPKSPDR S&P International Technology9795$14,645
32DOYMacroShares $100 Oil Down101,948$15,444
33ROBClaymore/Robb Report Global Luxury211,405$15,860
34CROClaymore/Zacks Country Rotation221,338$15,954
35EROiPath EUR/USD Exchange Rate ETN24319$16,386
36GRUElements MLCX Grains Total Return ETN152,857$16,875
37FVIFirst Trust Value Line Equity Allocation291,414$17,322
38IIHHOLDRS Internet Infrastructure1128,748$18,056
39PEHPowerShares Dynamic Europe Portfolio231,790$18,214
40PHWPowerShares Dynamic Hrdwr & Cons Elec412,162$18,940
41JYNiPath JPY/USD Exchange Rate ETN24324$19,511
42MKHHOLDRS Merrill Lynch Market 2000+106500$19,930
43PQSCPowerShares FTSE Nasdaq Small Cap131267$20,548
44DPUPowerShares DB Commodity Long ETN121,567$20,757
45BOSPowerShares DB Base Metals Sht ETN11557$20,851
46EXBClaymore/Clear Global Exchanges & Brokers222,052$20,851
47FPXFirst Trust IPOX-100 Index Fund371,471$20,949
48ISTSPDR S&P International Telecom91,152$21,237
49UAGE-TRACS CMCI Agriculture TR ETN131,148$21,256
50UCIE-TRACS CMCI Total Return ETN131,414$21,291
51FDDFirst Trust DJ STOXX Select Dividend 30202,176$21,473
52ADZPowerShares DB Agriculture Short ETN13633$22,807
53JPPSPDR Russell/Nomura PRIME Japan30729$23,113
54PMAPowerShares Active Mega-Cap Portfolio131,310$23,336
55RHORydex Inverse 2x S&P Health Care10390$23,381
56FUDE-TRACS CMCI Food Total Return ETN131,276$24,383
57UEMClaymore U.S.-1-The Capital Markets15690$24,530
58BSCElements Ben Graham Small Cap Value ETN93,538$24,682
59LVLClaymore/BBD High Income232,795$25,625
60IPSSPDR S&P International Consumer Staples91,300$25,706
61UBME-TRACS CMCI Industrial Metals TR ETN131,914$26,380
62PBTQPowerShares Global Biotech Portfolio71,348$26,610
63JJPiPath DJ AIG Precious Metals ETN10586$26,901
64PJOPowerShares FTSE RAFI Japan23867$27,116
65DODElements Dogs of the Dow Total Return ETN185,490$27,550
66PGDBarclays Asian&Gulf Currency Reval. ETN11567$28,134
67BDGPowerShares DB Base Metals Lng ETN111,905$28,548
68WMWElements Mrngstr Wide Moat Focus ETN193,848$28,889
69IRYSPDR S&P International Health Care91,348$29,431
70CSDClaymore/Clear Spin-Off ETF292,371$29,497
71PSTLPowerShares Global Steel Portfolio72,233$30,511
72PNXQPowerShares Nasdaq Next Q131,819$30,938
73URRMarket Vectors Double Long Euro ETN121,076$30,981
74PAOPowerShares Auto Balanced Growth NFA123,443$31,238
75PQYPowerShares Active AlphaQ131,976$32,343
76EENClaymore/Robeco Developed Intl Equity262,619$33,358
77XGCClaymore/Great Companies Lg-Cap Growth252,605$34,684
78EKHHOLDRS Europe 2001101800$34,801
79FFRFirst Trust FTSE EPRA/NAREIT Gbl Real Es201,710$35,268
80MZGClaymore/Mrngstr Manufact. SuperSector212,243$35,571
81IPNSPDR S&P International Industrial92,124$35,950
82EEZWisdomTree Earnings Top 100 Fund271,333$36,141
83PRYPowerShares FTSE RAFI Intl Real Estate163,362$36,845
84PTOPowerShares Auto Growth NFA124,581$37,639
85DEFClaymore/Sabrient Defender292,319$38,066
86GRNiPath Global Carbon ETN101,557$38,079
87DPCWisdomTree Intl Consumer Cyclical312,567$38,632
88EUWisdomTree Dreyfus Euro121,805$38,675
89UBGE-TRACS CMCI Gold Total Return ETN131,562$39,591
90DEWWisdomTree Europe High-Yielding Equity351,390$40,302
91FRNClaymore/BNY Mellon Frontier Markets113,371$40,740
92IPWSPDR S&P International Energy92,129$41,365
93IFNAiShares FTSE NAREIT North America181,952$41,502
94PRFGPowerShares FTSE RAFI Consumer Goods321,390$42,824
95TLLProShares UltraShort Telecom131,205$43,354
96RYJClaymore/Raymond James Strong Buy Eq83,933$44,122
97AFKMarket Vectors Africa ETF102,190$45,674
98AGFPowerShares DB Agriculture Long ETN132,910$46,608
99IROClaymore/Zacks Dividend Rotation183,686$46,721
100DDPPowerShares DB Commodity Short ETN12995$47,711
101IFSMiShares FTSE Dev Small Cap ex-N. Amer182,148$48,815
102RECRydex Inverse 2x S&P Energy114,776$50,231
103FNXFirst Trust Mid Cap Core AlphaDEX242,900$52,689
104RHSRydex S&P Equal Weight Cons Staples301,357$52,762
105PDQPowerShares FTSE RAFI A-Pac x-Jpn Sml Md194,700$52,944
106PNQIPowerShares Nasdaq Internet113,148$53,669
107GRICohen & Steers Global Realty Majors122,519$53,974
108IPDSPDR S&P International Consumer Discr92,829$54,281
109RTLiShares FTSE NAREIT Retail243,729$54,584
110UOYMacroShares $100 Oil Up1017,043$55,360
111RHMRydex 2x S&P Health Care111,433$56,833
112ICIiPath Optimized Currency Carry ETN131,424$63,111
113FADFirst Trust Multi Cap Growth AlphaDEX243,571$63,298
114PJGPowerShares Dynamic Mid Cap294,033$63,724
115PHJPowerShares High Gr. Rate Div Achievers447,819$65,955
116IPFSPDR S&P International Financial94,752$67,264
117ADRUBLDRS Europe 100 ADR794,495$68,281
118EXTWisdomTree Total Earnings272,362$69,723
119PIZPowerShares DWA Dev Mkts Tech Ldrs165,729$71,103
120NFOClaymore/Sabrient Insider324,038$71,271
121PBSPowerShares Dynamic Media479,176$71,538
122PDNPowerShares Dev Markets ex-US Small-Mid195,190$72,281
123UHNUnited States Heating Oil Fund LP133,576$74,282
124PLKPowerShares Active Low Duration132,948$74,338
125LDiPath DJ AIG Lead ETN101,948$74,494
126JJEiPath DJ AIG Energy ETN183,338$74,505
127FXRFirst Trust Industrials AlphaDex247,233$74,793
128FEXFirst Trust Large Cap Core AlphaDEX244,486$75,074
129RYTRydex S&P Equal Weight Technology302,386$75,628
130TDDTDX Independence 2010193,514$77,602
131CNYMarket Vectors Chinese Renminbi/USD ETN141,919$78,062
132PJMPowerShares Dynamic Small Cap295,629$79,750
133PIQPowerShares Dynamic Magniquant314,952$80,708
134RGIRydex S&P Equal Weight Industrials302,543$81,104
135DNLWisdomTree Japan Hi-Yield Equity352,210$82,362
136FTCFirst Trust Large Cap Growth Op AlphaDEX244,719$83,302
137EZMWisdomTree Mid Cap Earnings272,833$83,585
138HGIClaymore/Zacks Intl Yield Hog Index ETF227,310$84,673
139FYXFirst Trust Small Cap Core AlphaDEX245,076$85,557
140EZYWisdomTree Low P/E273,243$85,913
141PFPPowerShares International Listed Private Eq1910,552$87,399
142PVMPowerShares Dynamic Deep Value295,629$87,814
143TDXTDX Independence In-Target193,700$87,949
144RPVRydex S&P 500 Pure Value386,514$90,036
145DXJWisdomTree Japan Total Dividend352,648$90,902
146QQXTFirst Trust Nasdaq-100 Ex-Technology277,152$92,231
147PZJPowerShares Zacks Small Cap396,795$92,944
148FIOiShares FTSE NAREIT Industrial Office246,238$94,464
149DFEWisdomTree Europe SmallCap Dividend353,743$95,488
150RYURydex S&P Equal Weight Utilities302,548$95,833
151DBRWisdomTree Intl Health Care315,462$96,693
152JJUiPath DJ AIG Aluminum ETN104,348$96,952
153BALiPath DJ-AIG Cotton ETN103,433$97,230
154PGZPowerShares Dynamic Aggressive Growth296,329$97,878
155PTJPowerShares Dynamic Healthcare Services316,529$98,611

Disclosure:  no positions.

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