The ETF Deathwatch membership roll increases by three this month, as nine new names join the list and six leave. The total quantity now stands at 326, consisting of 226 ETFs and 100 ETNs. This equates to 18.7% of all exchange traded products (“ETPs”) being on ETF Deathwatch (20.1% of which are greater than six months in age). The 123 products launched during the preceding six months are automatically excluded from the list because all new funds are given a six-month grace period in order to attract investor interest.
There was no predominant investment theme among the nine funds added this month; however, eight of the nine had one factor in common, and that was their relatively old age. The BLDRS Europe 100 ADR (ADRU) was launched in November 2002, making it more than 12 years old. It now has the distinction of being the oldest product on the list, at 152 months. Other mature products joining the ranks of ETF Deathwatch this month include CurrencyShares Swedish Krona Trust (FXS) at 108 months, PowerShares DB Silver (DBS) at 102 months, ProShares Ultra SmallCap600 (SAA) at 101 months, Market Vectors Chinese Renminbi/USD ETN (CNY) at 88 months, ETRACS CMCI Long Platinum TR ETN (PTM) at 86 months, CS X-Links Long/Short Equity ETN (CSLS) at 64 months, and Guggenheim MSCI Emerging Markets Equal Country Weight (EWEM) at 55 months.
WisdomTree Emerging Markets ex-State-Owned Enterprises (XSOE) has been on the market only seven months, and it is the one exception to the old-age bias of the new members in July. Still, even when including this youngster, the average age of the nine products joining the list is more than seven years. As a result, the average age of all 326 names on Deathwatch increased from 48.3 to 50.3 months, and 105 are now more than five years old.
There are a couple of observations that can be gleaned from this data. First, the list is not saturated with newly introduced funds needing more than a six-month grace period as some sponsors have suggested. Second, successfully avoiding ETF Deathwatch for years is not a guarantee of being able to remain off of the list. This month’s newcomers can attest to this second point.
The average asset level of products on ETF Deathwatch increased from $6.8 million to $6.9 million, but the quantity of products with less than $2 million in assets jumped from 49 to 57. It is clear that a sponsor cannot make money on a fund with $2 million in assets, even with a hefty 1.00% expense ratio. What is not always clear is why sponsors are willing to subsidize these unprofitable products, and how long they will let the losses mount before pulling the plug.
Here is the Complete List of 326 Products on ETF Deathwatch for July 2015 compiled using the objective ETF Deathwatch Criteria.
The 9 ETPs added to ETF Deathwatch for July:
- BLDRS Europe 100 ADR (ADRU)
- CS X-Links Long/Short Equity ETN (CSLS)
- CurrencyShares Swedish Krona Trust (FXS)
- ETRACS CMCI Long Platinum TR ETN (PTM)
- Guggenheim MSCI Emerging Market Equal Country Weight (EWEM)
- Market Vectors Chinese Renminbi/USD ETN (CNY)
- PowerShares DB Silver (DBS)
- ProShares Ultra Small Cap600 (SAA)
- WisdomTree Emerging Markets ex-State-Owned Enterprises (XSOE)
The 4 ETPs removed from ETF Deathwatch due to improved health:
- DB Agriculture Double Long ETN (DAG)
- Deutsche X-trackers MSCI All China (CN)
- Global X China Industrial (CHII)
- InfraCap MLP ETF (AMZA)
The 2 ETPs removed from ETF Deathwatch due to delisting:
- ProShares Ultra Australian Dollar (GDAY)
- Direxion Daily Gold Bull 3x Shares (BAR)
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.