Emerging Global Advisors closed four of its EGShares ETFs last week, with Monday, September 29, 2014 being their last day of listed trading. The firm closed a dozen ETFs last October, but the complete liquidation process took more than five months for some of the funds. Shareholders received the bulk of their cash on October 15, 2013, eleven days after the funds’ final trading day. However, the final distributions were not made until March 19 of this year.
Another problem with the prior EGShares closings was the prospectus declaration that “Each fund’s net asset value will reflect the costs of closing the fund as calculated on the liquidation date.” At the time, representatives of EGShares assured me that shareholders would not bear the closing costs even though the prospectus said they would. The firm appears to be trying to rectify the problem this time around, as the press release states “The Advisor will bear all legal and administrative expenses associated with these Fund closures.”
The four EGShares closures of September 2014 are:
- EGShares China Infrastructure ETF (CHXX)
- EGShares TCW EM Intermediate Term Investment Grade Bond ETF (IEMF)
- EGShares TCW EM Long Term Investment Grade Bond ETF (LEMF)
- EGShares TCW EM Short Term Investment Grade Bond ETF (SEMF)
The four funds had combined assets of less than $15 million when the closures were announced. A liquidation schedule was not published, but it will hopefully take less than the five months needed previously. Uncertainty regarding closure costs and liquidation are two of the reasons we advise ETF shareholders to sell their holdings prior to delisting and avoid the liquidation process.
Disclosure covering writer, editor, and publisher: 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.