The ETF world crossed another major milestone with the delisting of Direxion Daily Total Market Bear 1x Shares (TOTS) before the market opened yesterday (7/18/16). By itself, the closure of this ETF is not a remarkable event, but in conjunction with the 599 closures that came before it, the TOTS closure brings the lifetime death toll of U.S.-listed ETFs and ETNs to 600.
May 2009 is when the industry reached its first 100-closure milestone. Since then, each successive round-number increment has occurred on a regular basis, with the other 100-closure milestones taking place in December 2011 (200), October 2012 (300), March 2014 (400), and we crossed the 500 threshold in May 2015.
With a total of nearly 2,540 ETFs and ETNs brought to market in the U.S, these 600 closures represent a mortality rate of 23.6%. Additionally, 472 products were on ETF Deathwatch for June, and the smallest 1,044 of the 1,931 listings (54%) at the end of June account for only 1% of all ETF assets. They are clearly not profitable for their sponsors. Many of these will also not survive, and getting to the 1,000 ETF closure milestone is only a matter of time.
Disclosure covering writer: 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.