ETF Deathwatch for November had 12 additions and 12 exits. All of the funds exiting the Deathwatch list were due to improved health. No funds within the Deathwatch list were closed for the month of November, likely due to the holiday season and no need for record-keeping changes that we sometimes see in December. The membership roll remains at 457. Only one of the funds removed from the list was an ETN, while all other removals and additions were ETFs. The absence of any ETNs (typically more financially creative products) in the additions indicates a healthy market appetite for risk.
Half of the new additions to the list were young funds, having just come out of the six-month grace period given to all new ETFs. Since they haven’t had a large amount of time to attract investor interest, they still have a good chance of coming off the list down the road; however, only three additions were older than 5 years, which is indicative of declining interest. These are the most likely to be vulnerable to closure. All but one was added to the list due to low trading volume rather than a decrease in assets under management (AUM). COMG, a commodity strategy fund, was the sole ETF addition with insufficient AUM. All additions were niche products ranging from local currency international debt to an ESG dividend strategy. Each product services a small portion of the market, indicating that perhaps these narrowly focused products were not as popular as originally expected.
With no fund closures this month, it appears that fund managers don’t feel an overwhelming desire to reduce costs in exchange for the potential future profit that troubled products may bring in the future. The finance industry tends to slow down a bit during the holiday season before the end of the year, and this, coupled with a healthy domestic equity market, may have temporarily curbed such closures.
Some sponsors remain fairly optimistic, or larger expense ratios may keep threatened products alive longer than others. There are 37 ETFs and ETNs on Deathwatch this month that have been in the market for more than 10 years. That is a long time to wait for investor interest to kick in. The BLDRS Asia 50 ADR ETF (ADRA) and BLDRS Europe 100 ADR (ADRU) are the most extreme examples still on the list, while one product hits 10 years this month: the ProShares Ultrashort MSCI Japan ETF, with assets of only $8.66 million. Product offerings such as this tend to service tactical traders rather than those seeking long-term holdings (a niche where ProFunds has excelled, historically). Volume over the past month is up somewhat, though nowhere near its highs for the fund in 2011. The higher expense ratio for this fund may be supportive of a smaller AUM, keeping the product available for tactical traders.
The average asset level of the threatened ETFs on ETF Deathwatch fell slightly from $7.6 million to $7.5 million, and the quantity of products with less than $2 million in assets decreased from 85 to 83. The average age rose from 52.2 to 53.4 months, and the number of products more than 5 years of age increased from 176 to 177. The largest ETF on the list had an AUM of $24.4 million, while the smallest had assets of just $405,000.
Here is the Complete List of 457 ETFs and ETNs on ETF Deathwatch for November 2017 compiled using the objective ETF Deathwatch Criteria.
The 12 ETFs added to ETF Deathwatch for October:
- WisdomTree Asia Local Debt Fund (ALD)
- Amplify YieldShares Oil Hedged MLP Income ETF (AMLX)
- GraniteShares S&P GSCI Commodity Broad Strategy no K-1 ETF (COMG)
- WisdomTree United Kingdom Hedged Equity Fund (DXPS)
- VanEck Vectors Green Bond ETF (GRNB)
- ClearBridge Large Cap Growth ESG ETF (LRGE)
- Hartford Multifactor Low Volatility International Equity ETF (LVIN)
- Hartford Multifactor Low Volatility US Equity ETF (LVUS)
- PowerShares Dynamic Networking Portfolio (PXQ)
- ProShares RAFI Long/Short (RALS)
- ALPS/Dorsey Wright Sector Momentum ETF (SWIN)
- ClearBridge Dividend Strategy ESG ETF (YLDE)
The 12 ETFs removed from ETF Deathwatch due to improved health:
- Principal Healthcare Innovators Index ETF (BTEC)
- Direxion Auspice Broad Commodity Strategy ETF (COM)
- iShares Edge MSCI Multifactor International Small-Cap ETF (ISCF)
- John Hancock Multifactor Industrials ETF (JHMI)
- Janus Detroit Street Trust Janus Henderson Small/Mid Cap Growth Alpha ETF (JSMD)
- NuShares ESG Large-Cap Growth ETF (NULG)
- NuShares ESG Mid-Cap Growth ETF (NUMG)
- NuShares ESG Mid-Cap Value ETF (NUMV)
- ProShares MSCI Emerging Markets Dividend Growers ETF (EMDV)
- ETRACS Monthly Pay 2xLeveraged US High Dividend Low Volatility ETN (HDLV)
- Fertilizers/Potash ETF (SOIL)
United States Diesel-Heating Oil Fund LP (UHN)
Looking for more? See our ETF Deathwatch Archives
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.