For the month of July, the ETF Deathwatch increased in size. Twenty-four exchange-traded products (“ETPs”) were added to the list, and 19 funds were removed, making July a busier month in terms of additions. Of the removals, 16 were removed due to increased health and three were due to asset managers closing their funds.
July was a perplexing time for domestic equity markets, so the high number of funds that were added to the Deathwatch in July was not surprising. Many of the additions were index-tracking ETFs. Some of these additions may be due to a delayed response to the market correction that occurred in May.
For July, the additions were mostly equity ETFs from a variety of sectors and styles. Of the additions this month, three were added because their 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 for the month could be due to the market’s reaction to current events. Investors may have been waiting for a better time to buy or sell these assets.
The number of equity ETFs added to the Deathwatch list for the month wasn’t surprising. The increase in trade tensions between China and the U.S., in addition to the Federal Reserve’s quarter-point interest-rate cut, made July a tricky month to navigate. The presence of a broad range of sectors and styles on the Deathwatch list—including emerging markets, developed markets, large caps, mid caps, and small caps—shows the broader equity market has been struggling to sustain the 2019 rally. Money managers may have chosen this time to get out of equity indexes to avoid further risk from increasing trade tensions. As money managers allocate to safer holdings, the average daily trading volume in equity-index ETFs is bound to decline.
There are 46 ETFs and ETNs on Deathwatch this month that 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, dominate 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 play a larger role for clients who are interested in active management.
The average asset level of the threatened ETFs on ETF Deathwatch decreased from $7.68 million to $7.47 million, and 53 products had less than $2 million in assets. The average age of products on the list decreased from 47.75 months to 47.74, and the number of products more than 5 years of age increased from 115 to 119. The largest ETF on the list had an AUM of $24.77 million, while the smallest had assets of just $462,000.
Here is the Complete List of 459 ETFs and ETNs on ETF Deathwatch for July 2019 compiled using the objective ETF Deathwatch Criteria.
The 24 ETF/ETNs added to ETF Deathwatch for July:
- AdvisorShares Vice ETF (ACT)
- iShares US Dividend and Buyback ETF (DIVB)
- Direxion Daily Industrials Bull 3x Shares (DUSL)
- Franklin FTSE Brazil ETF (FLBR)
- First Trust Long Duration Opportunities ETF (LGOV)
- Direxion Daily Comm Bear 3X (MUTE)
- VanEck Vectors Uranium+Nuclear Energy ETF (NLR)
- SPDR MSCI World StrategicFactors ETF (QWLD)
- Direxion MSCI Def/Cyc (RWDC)
- Direxion MSCI DM/EM (RWDE)
- Direxion MSCI EM/DM (RWED)
- Direxion FTSE/Russell Int/US (RWIU)
- Direxion Russell Large/Small (RWLS)
- Direxion FTSE/Russell US/Int (RWUI)
- ProShares UltraPro Short Com (SCOM)
- iPath Series B Bloomberg Sugar Subindex Total Return ETN (SGG)
- Tortoise Cloud Infrastructure Fund (TCLD)
- Tortoise Digital Payments Infrastructure Fund (TPAY)
- ProShares UltraPro Communication (UCOM)
- American Energy Independence ETF (USAI)
- X-Links Crude Oil Shares Covered Call ETN (USOI)
- Amplify Intl Online Retail (XBUY)
- ProShares Ultra Communication (XCOM)
- ProShares Ultrashort Communication (YCOM)
The 3 ETFs/ETNs that were closed:
- Bernstein US Research Fund (BERN)
- Rogers AI Global Macro ETF (BIKR)
- Bernstein Global Research Fund (BRGL)
The 16 ETFs/ETNs removed from ETF Deathwatch due to improved health:
- VictoryShares Emerging Market Volatility Wtd ETF (CEZ)
- Cambria Emerging Shareholder Yield ETF (EYLD)
- Gadsden Dynamic Multi-Asset (GDMA)
- Hartford Schroders Tax-Aware Bond ETF (HTAB)
- Invesco Strategic Emerging Markets ETF (ISEM)
- Invesco Strategic US ETF (IUS)
- Columbia Multi-Sector Municipal Income ETF (MUST)
- Direxion Daily Pharmaceutical & Medical Bull 3X Shares (PILL)
- EventShares US Policy Alpha ET (PLCY)
- Principal Price Setters Index ETF (PSET)
- ProShares Inflation Expectations ETF (RINF)
- Reverse Cap Weighted US Large Cap ETF (RVRS)
- Cambria Sovereign Bond ETF (SOVB)
- Vanguard US Liquidity Factor ETF (VFLQ)
- VictoryShares Dividend Accelerator ETF (VSDA)
- Invesco Russell MidCap Equal Weight ETF (XMHQ)