The ETF Deathwatch list decreased in size in January. Ten exchange-traded products (“ETPs”) were added to the list, and 23 funds were removed. Of the removals, 17 were removed due to increased health and six were due to asset managers closing their funds. Equities continued to rise in January, so the decrease in the size of the Deathwatch list was to be expected.
The funds added in January were a mix of actively managed, international, and niche products. One fund was added because its assets under management (“AUM”) was consistently below $5 million for three months. The rest were added due to low average daily volume. These additions may have enough AUM to keep them from closure; however, our system takes into account both AUM and volume, so it’s likely that should volume and interest remain low, these funds may be considered for closure. The low volume in these funds could be due to the nature of the investment product. Many of the funds on the Deathwatch list are actively managed funds. Because equity markets have been strong recently, investors may be opting to stick with passive equity funds rather than actively managed funds and strategies that offer downside protection.
The addition of niche ETF products to the list wasn’t a surprise. The returns in the overall U.S. equity market have been strong, giving investors less reason to move money to actively managed and niche products. January has been rough for investors due to the outbreak of the coronavirus, fears of escalating tension between Iran and the U.S., and the impeachment trial of President Trump. Despite the overall negative sentiment at the start of January, U.S. equities continued their rally until the last week of January, when fears about the coronavirus increased. The fact that there were more removals from the Deathwatch than additions indicates January has been a strong month for markets. With so many negative headlines, it wouldn’t have been a shock for it to have been a little rougher for overall volume in ETFs. What we saw instead is that investors are still confident in this economic expansion.
Fifty-three ETFs and ETNs on the January Deathwatch list have been in the market for more than 10 years. This is a long time for ETPs to exist while remaining on our Deathwatch list. Leveraged and short ETF instruments, as well as a number of commodity ETPs, dominated our list of funds older than 10 years. It’s possible that the fund companies managing these products will allow them to remain active, as they may play a larger role for clients interested in active management.
The average asset level of the threatened ETFs on ETF Deathwatch decreased from $8.35 million to $8.01 million, and 66 products had less than $2 million in assets. The average age of products on the list increased from 50.53 months to 51.45 months, and the number of products more than 5 years of age remained at 131. The largest ETF on the list had an AUM of $25 million, while the smallest had assets of just $492,000.
Here is the Complete List of 468 ETFs and ETNs on ETF Deathwatch for January 2020 compiled using the objective ETF Deathwatch Criteria.
The 10 ETFs/ETNs added to ETF Deathwatch for January:
- ProShares UltraShort MSCI Japan (EWV)
- iShares Evolved US Consumer Staples ETF (IECS)
- Principal International Multi-Factor Core Index ETF (PDEV)
- Principal US Large-Cap Multi-Factor Core Index ETF (PLC)
- Principal US. Small-MidCap Multi-Factor Core Index ETF (PSM)
- FlexShares Emerging Markets Quality Low Volatility Index Fund (QLVE)
- First Trust RiverFront Dynamic Asia Pacific ETF (RFAP)
- Barclays Return on Disability ETN (RODI)
- ProShares UltraShort Basic Materials (SMN)
- Barclays ETF Linked to the S&P 500 Dynamic Total Return Index (VQT)
The 6 ETFs/ETNs that were closed:
- WisdomTree Dynamic Bearish U.S. Equity Fund (DYB)
- Virtus Glovista Emerging Markets ETF (EMEM)
- Cushing 30 MLP Index ETNs due June 15 2037 (PPLN)
- NYSE Pickens Oil Response ETF (RENW)
- WisdomTree CBOE Russell 2000 PutWrite Strategy Fund (RPUT)
- WisdomTree Balanced Income Fund (WBAL)
The 17 ETFs/ETNs removed from ETF Deathwatch due to improved health:
- AlphaClone Alternative Alpha ETF (ALFA)
- ProShares MSCI Emerging Markets Dividend Growers ETF (EMDV)
- First Trust S&P International Dividend Aristocrats ETF (FID)
- LibertyQ Global Dividend ETF (FLQD)
- WisdomTree US Short-Term High Yield Corporate Bond Fund (SFHY)
- WisdomTree Fundamental US Corporate Bond Fund (WFIG)
- X-Links Monthly Pay 2xLeveraged Alerian MLP Index ETN (AMJL)
- AdvisorShares Focused Equity ETF (CWS)
- iShares US Dividend and Buyback ETF (DIVB)
- Direxion Daily Industrials Bull 3x Shares (DUSL)
- Global X MSCI SuperDividend EAFE ETF (EFAS)
- Principal Millennials Index ETF (GENY)
- iShares Evolved US Discretionary Spending ETF (IEDI)
- Defiance Quantum ETF (QTUM)
- Global X MSCI SuperDividend Em (SDEM)
- ProShares Ultra FTSE Europe (UPV)
- ProShares Ultra Industrials (UXI)
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