The August list of current exchange traded products showed a decline for the first time this year. The count now stands at 1,474 (1,256 ETFs and 218 ETNs). Six new ETFs came to market during the month while eighteen saw their last day of trading. The net reduction of 12 marks the beginning of an industry consolidation, as the drop wipes out more than two months of new product introductions. A two-month setback hasn’t occurred since the first industry consolidation came to an end in May 2009.
That first consolidation began about four years ago and turned out to be a minor blip in the grand scheme of things. The period was marked by rising closure counts coupled with a reduction in new product rollouts. A similar scenario is evolving today. ETF closures are on course for a record-breaking year with 71 funds planning to close before year end.
New introductions are also declining. Only 69 products have come to market in the past six months, the lowest level since October 2009. The 12-month average of new ETPs peaked in February of this year at 28.6 and has been falling ever since, hitting its lowest level in 18 months.
The consolidation trend is likely to continue in coming months as the Direxion [Direxion Closing Nine Leveraged and Inverse ETFs] and Russell [Russell Makes Strategic Retreat From Index ETF Biz] closures become effective in September and October.
The overall industry is very strong, and this consolidation is likely to be another minor event when the final history is written. The problem at this time is the same as it was in 2008 – too many products came to market in too short of time.
Evidence of health is easily found in fund asset figures, which continue to grow. Assets increased 2.5% to $1.24 trillion in August. The number of funds with more than $10 billion in assets rose from 22 to 24. ETPs exceeding the $1 billion threshold climbed from 159 to 166.
While it isn’t unusual to see trading activity drop in the final summer month of August, the depth to which it fell is worth noting. Total dollar volume dropped to just $991 billion, failing to top the $1 trillion level for the first time in months. SPDR S&P 500 (SPY) continues to single-handedly generate more than a third of all ETP trading with a 34.2% share.
ETPs averaging more than $1 billion per day in trading remained at the extremely low level of five, yet they accounted for nearly 52% of all ETP trading activity. Products averaging more than $100 million in dollar volume per day decreased from 60 to 53 while capturing 84.4% of trading activity. The quantity with more than $10 million of trading per day also slid, dropping from 216 to 208 while grabbing 96.1% of trading.
|August 2012 Month End||ETFs||ETNs||Total|
|Currently Listed U.S.||1,256||218||1,474|
|Listed as of 12/31/2011||1,166||203||1,369|
|New Introductions for Month||6||0||6|
|Delistings/Closures for Month||18||0||18|
|Net Change for Month||-12||0||-12|
|New Introductions 6 Months||62||7||69|
|New Introductions YTD||125||15||140|
|Net Change YTD||+90||+15||+105|
|Assets Under Mgmt ($ billion)||$1,219||$17.8||$1,237|
|% Change in Assets for Month||+2.5%||+3.5%||+2.5%|
|Qty AUM > $10 Billion||24||0||24|
|Qty AUM > $1 Billion||163||3||166|
|Qty AUM > $100 Million||541||23||564|
|Monthly $ Volume ($ billion)||$973||$18.6||$991|
|% Change in Monthly $ Volume||-9.0%||-10.8%||-9.0%|
|Avg Daily $ Volume > $1 Billion||5||0||5|
|Avg Daily $ Volume > $100 Million||51||2||53|
|Avg Daily $ Volume > $10 Million||198||10||208|
Data sources: Daily prices and volume of individual ETPs from Norgate Premium Data. Fund counts and all other information compiled by Invest With An Edge.
New products launched in August (sorted by launch date):
- AdvisorShares QAM Equity Hedge ETF (QEH) [QEH: Another Hedge Fund Replication Attempt]
- First Trust Multi-Asset Diversified Income Index Fund (MDIV) [TDIV, MDIV: Technology Dividend and Multi-Asset Income ETFs]
- First Trust NASDAQ Technology Dividend Index Fund (TDIV)
- EGShares Beyond BRICs ETF (BBRC) [BBRC, EMDD: New ETFs Go Beyond BRICs, Into Domestic Demand]
- EGShares Emerging Markets Domestic Demand ETF (EMDD)
- First Trust CBOE S&P 500 VIX Tail Hedge Fund (VIXH) [VIXH ETF Touts Black Swan Protection]
Product closures/delistings in August (sorted by name):
- AdvisorShares Dent Tactical ETF (DENT) [Last Day Of Trading For DENT]
- Focus Morningstar Basic Materials Index ETF (FBM) [A Second Death For FocusShares]
- Focus Morningstar Communication Services ETF (FCQ)
- Focus Morningstar Consumer Cyclical ETF (FCL)
- Focus Morningstar Consumer Defensive ETF (FCD)
- Focus Morningstar Energy Index ETF (FEG)
- Focus Morningstar Financial Services ETF (FFL)
- Focus Morningstar Health Care Index ETF (FHC)
- Focus Morningstar Industrials Index ETF (FIL)
- Focus Morningstar Large Cap Index ETF (FLG)
- Focus Morningstar Mid Cap Index ETF (FMM)
- Focus Morningstar Real Estate Index ETF (FRL)
- Focus Morningstar Small Cap Index ETF (FOS)
- Focus Morningstar Technology Index ETF (FTQ)
- Focus Morningstar US Market Index ETF (FMU)
- Focus Morningstar Utilities Index ETF (FUI)
- IQ South Korea Small Cap ETF (SKOR) [Index IQ Liquidates South Korea ETF Before Official Closure]
- iShares 2012 S&P AMT-Free Muni Series (MUAA) [Graceful Exit For MUAA ETF]
Product changes in August:
- United States Heating Oil Fund (UHN) will become the United States Diesel-Heating Oil Fund (UHN) effective August 7, 2012.
- WisdomTree International Hedged Equity Fund (HEDJ) transformed itself into the WisdomTree Europe Hedged Equity (HEDJ) effective August 29. The ETF’s category classification in the ETF Field Guide will change from Developed Markets ex-US to Regional: Europe. This fund makeover will allow HEDJ to have the best performance history in its new category even though its history is no longer applicable.
Announced Product Changes for Coming Months:
- DirexionShares is closing nine leveraged and inverse ETFs. September 5 will be the last day of trading for BRIL,BRIS, COWL, COWS, INDZ, LEHS, MATS, SICK, and RETS.
- ProShares Ultra VIX Short-Term Futures ETF (UVXY) will undergo a 1-for-10 reverse split effective September 7, 2012.
- Russell is making a strategic exit from the indexed ETF business by closing all 25 of its indexed ETFs. Last day of trading will be October 16, 2012.
- Guggenheim BulletShares 2012 Corporate Bond (BSCC) will terminate on or about December 31 due to its planned maturity and liquidation.
- Guggenheim BulletShares 2012 High Yield Corporate Bond (BSJC) will terminate on or about December 31 due to its planned maturity and liquidation.
Previous monthly ETF statistics reports are available here.
Disclosure covering writer, editor, publisher, and affiliates: 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.