ETF Deathwatch for August had 19 additions and 13 exits. Six of the departing funds were due to improved health, while the other seven joined the ranks of the “dearly departed.” The membership roll now stands at 491. All of the closed funds and funds removed due to improved health were exchange-traded funds (“ETFs”), as opposed to exchange-traded notes (“ETNs”). ETNs represent a far smaller number of securities in the U.S. than ETFs, indicating the instability of some of these more financially creative products. The lack of ETNs in this month’s removals may indicate healthy market activity for more experimental products.
Only six of the 19 new members were significantly young securities, 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, seven of the added securities were older than 5 years, indicating a high likelihood of decreasing interest. All were added to the list due to low trading volume rather than a decrease in AUM. Six of the 19 funds added were ETNs, which is indicative of the riskiness of the securities from a fund company standpoint—these creative securities are not always as popular as initially expected. Three were also leveraged products, which was significant because the SEC has provided guidance that indicates future creation of leveraged products may be limited. However, under the new administration, the SEC has recently approved an application to create a 4X leveraged product, indicating reduced red tape in the creation of these products and a decrease in the value of grandfathered products.
This month, all but one of the eliminated funds had at least a yearlong track record, with an average of more than three years of performance, indicating that fund managers are willing to wait longer for funds to become profitable. The oldest closure was of the WisdomTree Global Real Return ETF (RFF), which had more than six years of history.
Other sponsors seem to be unduly optimistic. There are 28 ETFs and ETNs on Deathwatch this month that have been on 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 in the list, while the Elements Linked to Spectrum Large Cap US Sector Momentum Index ETF (EEH) hit its 10-year mark this month, with net assets of $1.18 million and low daily volume.
The average asset level of the 491 zombie ETFs on ETF Deathwatch rose from $6.4 million to $6.7 million, and the number of products with less than $2 million in assets increased from 101 to 119. The average age rose from 49.0 to 50.8 months, and the number of products more than 5 years of age increased from 180 to 189. The largest ETF in the list had an AUM of $24.4 million, while the smallest had assets of just $345,000.
Here is the Complete List of 491 ETFs and ETNs on ETF Deathwatch for August 2017 compiled using the objective ETF Deathwatch Criteria.
The 19 ETFs added to ETF Deathwatch for August:
- Global X Founder-Run Companies ETF (BOSS)
- PowerShares DB Silver Fund (DBS)
- First Trust Canada AlphaDEX Fund (FCAN)
- First Trust Hong Kong AlphaDEX Fund (FHK)
- GS Connect S&P GSCI Enhanced Commodity Total Return Strategy Index ETN (GSC)
- ETRACS Monthly Pay 2xLeveraged US High Dividend Low Volatility ETN (HDLV)
- iShares Edge MSCI Min Vol EAFE Currency Hedged ETF (HEFV)
- ETRACS Monthly Pay 2xLeveraged MSCI US REIT Index ETN (LRET)
- C-Tracks ETNs based on Performance of the Miller/Howard MLP Fundamental Index (MLPC)
- Morgan Stanley Cushing MLP High Income Index ETN (MLPY)
- iPath Pure Beta Crude Oil ETN (OLEM)
- PowerShares Balanced Multi-Asset Allocation Portfolio (PSMB)
- PowerShares Conservative Multi-Asset Allocation Portfolio (PSMC)
- PowerShares Growth Multi-Asset Allocation Portfolio (PSMG)
- PowerShares Moderately Conservative Multi-Asset Allocation Portfolio (PSMM)
- Global X MSCI SuperDividend Em (SDEM)
- Tortoise Water Fund (TBLU)
- ProShares Ultra Yen (YCL)
- Amplify YieldShares Senior Loa (YESR)
The 7 ETFs removed from ETF Deathwatch due to delisting:
- PureFunds ISE Big Data ETF (BIGD)
- WisdomTree Trust WisdomTree Strategic Corporate Bond Fund (CRDT)
- PureFunds Solactive FinTech ETF (FINQ)
- Amplify YieldShares Senior Loa (PFV)
- WisdomTree Global Real Return Fund (RRF)
- WisdomTree Western Asset Unconstrained Bond Fund (UBND)
- First Trust Dorsey Wright Peoples Portfolio ETF (VIXH)
The 8 ETFs removed from ETF Deathwatch due to improved health:
- iShares Trust iShares MSCI Global Impact ETF (MPCT)
- FlexShares US Quality Large Cap Index Fund (QLC)
- WisdomTree Emerging Markets EX-State-Owned Enterprises Fund (XSOE)
- Global X FinTech ETF (FINX)
- First Trust International IPO Fund (FPXI)
- Global X Millennials Thematic ETF (MILN)
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.