ETF industry watchers often like to point to fund closings as a sign of weakness. As the publisher of ETF Deathwatch, I have been accused of having a negative bias toward closures and the industry as a whole. However, anyone looking beyond the headlines can readily attest that I view ETF closures not only a normal part of the industry’s evolution but a healthy process too. In fact, it’s the failure (or unwillingness or stubbornness) to close unsuccessful products that I view as the unhealthy act.

By most any standard you want to use, Invesco PowerShares is a successful ETF sponsor. In the U.S. marketplace, the firm is the fourth largest based on assets, the second largest based on product count, and the fourth oldest sponsor still in existence.

In my opinion, one of the keys to its success is the willingness to close and liquidate funds that are unsuccessful, outdated, or broken. Just this week, the firm shuttered four ETFs that represented less than 1% of its assets. As announced in ETF Stats for December 2013, February 18 was the last day of trading for PowerShares KBW International Financial (KBWX), PowerShares MENA Frontier Countries (PMNA), PowerShares Dynamic MagniQuant (PIQ), and PowerShares Lux Nanotech (PXN).

In all, 49 ETPs carrying the PowerShares brand have closed and liquidated. This gives them the #1 ranking for closures. Probably not something you’ll see in a press release even though I believe it has been a major contributor to its success.

PowerShares was also part of the most unique ETP closure in history. They, and issuing partner Deutsche Bank, closed and liquidated the PowerShares DB Crude Oil Double Long ETN (former ticker DXO) in September 2009. The ETN, launched 15 months earlier, was wildly successful and had already attracted more than $600 million in assets. However, due to CFTC restrictions, it was unable to issue more shares. Rather than letting DXO continue to trade as a broken product, and collect more than $4.5 million in annual fees, they did the right thing. They shuttered and liquidated the ETN, thereby preventing its conversion to a closed-end fund and harming investors unaware of broken product dangers.

ETF closings are good for the industry. There are more than a dozen broken products that should be taken off the market, and hundreds of ETPs with too few assets and too little liquidity to properly serve the investing public. Once these ETFs and ETNs do decide to close, then please consult Five Steps to Avoid Disaster When Your ETF Closes.

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.