The 41 closures occurring in August make it the worst month ever for ETF mortality. With only 10 new products coming to market, the month ended with a net decline of 31 listings. The dismal showing leaves the product count at 1,914 (1,716 ETFs and 198 ETNs). Assets climbed 1.0% to $2.39 trillion, and despite the month’s reputation for lackluster volume, trading activity increased 0.3% over July levels to $1.39 trillion.
Closure activity is the big story for the month, as major sponsors pulled the plug on more than $1.1 billion of fund assets, including many individual ETFs with asset levels that many other sponsors can only dream about. UBS closed and redeemed nine ETNs, including the UBS AG FI Enhanced Big Cap Growth ETN (FBG), with its $151 million in assets. In all, UBS redeemed more than $293 million of its ETNs in August.
BlackRock shuttered 10 of its iShares products, including all four of its actively managed equity ETFs. The closures included iShares Enhanced U.S. Large-Cap (IELG), with $81 million in assets, and iShares Enhanced International Large-Cap (IEIL), with $68 million in assets. The iShares closures affected assets totaling $292 million.
State Street SPDRs had the largest industry impact, as its 12 closures totaled more than $496 million. These included SPDR Nuveen Barclays California Muni Bond (CXA) $149 million, SPDR Nuveen Barclays Build America Bond (BABS) $61 million, SPDR Nuveen Barclays New York Muni Bond (INY) $34 million, SPDR S&P BRIC 40 (BIK) $73 million, and SPDR Russell/Nomura Small Cap Japan (JSC) $54 million.
ProShares was another sponsor taking multiple ETFs off the market. Its nine closures accounted for only $29 million in assets and were part of its regular ongoing house-cleaning process. The largest of the bunch was ProShares Ultra Bloomberg Commodity (UCD), with $12 million in assets.
Regular readers of this column are aware that I have not been kind to AccuShares and its dysfunctional teeter-totter shares. The firm’s so-called “spot VIX” ETFs were launched amid a heap of positive praise on May 19, 2015. However, I was the dissenting voice, claiming the teeter-totter structure was unable to track spot prices, just like the previously failed MacroShares. Then it got worse when each AccuShares fund started issuing distributions of the opposite shares (owners of the VIX Up fund received distributions consisting of VIX Down shares). Despite the total failure of their VIX funds, the firm tried again in June of this year with a pair of oil funds, described here in “More Teeter-Totter Failures.” Today, I am pleased to inform you that AccuShares has pulled the plug on all four funds, with closures and liquidation occurring in September.
Industry inflows totaled $29.2 billion for the month, which more than offset the $6.4 billion in market losses. The median asset level of the 1,914 listings is just $73 million. Four of the funds closed in August had asset levels above the median. If this is a sign of things to come, then half of the industry’s current offerings are in jeopardy.
|August 2016 Month End||ETFs||ETNs||Total|
|Currently Listed U.S.||1,716||198||1,914|
|Listed as of 12/31/2015||1,644||201||1,845|
|New Introductions for Month||9||1||10|
|Delistings/Closures for Month||32||9||41|
|Net Change for Month||-23||-8||-31|
|New Introductions 6 Months||116||7||123|
|New Introductions YTD||137||13||150|
|Net Change YTD||+72||-3||+69|
|Assets Under Management||$2,369 B||$24.1 B||$2,393 B|
|% Change in Assets for Month||+1.0%||-1.4%||+1.0%|
|% Change in Assets YTD||+13.0%||+12.5%||+13.0%|
|Qty AUM > $10 Billion||54||0||54|
|Qty AUM > $1 Billion||268||5||273|
|Qty AUM > $100 Million||818||37||855|
|% with AUM > $100 Million||47.7%||18.7%||44.7%|
|AUM Flows for Month||+$29.20 B||-$0.02 B||+$29.18 B|
|AUM Flows YTD||+$145.36 B||+$2.28 B||+$147.64 B|
|Monthly $ Volume||$1,315 B||$72.9 B||$1,388 B|
|% Change in Monthly $ Volume||-1.1%||+35.5%||+0.3%|
|Avg Daily $ Volume > $1 Billion||7||0||7|
|Avg Daily $ Volume > $100 Million||78||6||84|
|Avg Daily $ Volume > $10 Million||304||11||315|
|Actively Managed ETF Count (w/ change)||148||-3 mth||+11 ytd|
|Actively Managed AUM||$27.0 B||+1.2% mth||+17.8% ytd|
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):
- C-Tracks Miller/Howard MLP Fundamental Index Series B ETN (MLPE), launched 8/9/16, is an exchange-traded note (“ETN”) that is an unsecured debt security issued by Citigroup Global Markets Holdings Inc. and guaranteed by Citigroup Inc. The underlying index intends to provide exposure to a target basket of 25 MLPs selected using quantitative fundamental factors including distribution growth, estimated capital expenditures, and distribution coverage. MLPE appears to be a replacement for the original C-Tracks Miller/Howard MLP Fundamental Index ETN (MLPC), which launched in September 2013 but no longer has a functioning creation mechanism and is classified as a broken product. MLPE charges an annual investor fee of 0.85% (MLPE overview).
- Summit Water Infrastructure Multifactor ETF (WTRX), launched 8/9/16, delivers exposure to the Summit Zacks Global Water Index, which tracks the performance of publicly listed U.S. and international companies with a significant portion of their business activities dedicated to the global water industry. The Index uses a three-factor model to implement a transparent, rules-based methodology incorporating fundamental factors that have been strong historical indicators of the long-term performance of water equities. WTRX has an expense ratio of 0.80% (WTRX overview).
- Direxion Daily European Financials Bear 1x Shares (EUFS), launched 8/10/16, seeks daily investment results that correspond to 100% of the inverse of the performance of the MSCI Europe Financials Index. The new ETF has its expense ratio capped at 0.45% (EUFS overview).
- iSectors Post-MPT Growth ETF (PMPT), launched 8/17/16, is an actively managed fund-of-funds ETF designed to achieve investment returns that outperform the S&P 500 Index with lower downside risk over a complete market cycle. The ETF objectively allocates and rebalances the portfolio among nine specific, low-correlated asset classes, referred to as primary sectors. The mathematical model incorporates 15 economic and capital market factors. It limits exposure to any single sector at 30%, although the government bond allocation can be up to 50%. The model uses drawdowns instead of standard deviation as its risk measurement, and the ETF remains fully invested at all times. The expense ratio is higher than average at 1.55% (PMPT overview).
- Principal Healthcare Innovators Index ETF (BTEC), launched 8/22/16, tracks an index designed to provide exposure to U.S. companies classified as early-stage health care companies. It uses a proprietary security selection process, a modified market capitalization weighting approach, and has an expense ratio of 0.42% (BTEC overview).
- Principal Millennials Index ETF (GENY), launched 8/22/16, tracks an index designed to provide exposure to global equity securities of companies that are impacted by the spending and lifestyle activities of the millennial generation. The modified equal-dollar weighted index weights securities with a two-factor model of quality growth and value. GENY has an expense ratio of 0.45% (GENY overview).
- First Trust Horizon Managed Volatility Developed International ETF (HDMV), launched 8/25/16, is an actively managed ETF with an objective to provide capital appreciation. It will invest in common stocks and depositary receipts of developed market companies listed and traded on non-U.S. exchanges that Horizon Investments, LLC, believes exhibit low future expected volatility. HDMV has an expense ratio of 0.80% (HDMV overview).
- First Trust Horizon Managed Volatility Domestic ETF (HUSV), launched 8/25/16, is an actively managed ETF with an objective to provide capital appreciation. It will invest in common stocks of listed U.S. companies that Horizon Investments, LLC, believes exhibit low future expected volatility, with an expense ratio of 0.70% (HUSV overview).
- PureFunds ETFx HealthTech ETF (IMED), launched 8/31/16, concentrates on health care informatics, medical instruments, and medical devices, which are three technology-driven areas of the health care field. The underlying index uses a rules-based methodology with a modified equal-weighting scheme. The ETF has an expense ratio of 0.75% global (IMED overview).
- PureFunds Solactive FinTech ETF (FINQ), launched 8/31/16, intends to be a transparent vehicle for investing in the technology space that is disrupting the financial sector. The “FinTech” industry challenges status-quo actors with innovative applications of technology that amass data, user platforms, and aggregation of service providers to enhance financial services for the consumer. The industry promotes tech-based solutions for the modern economy with a goal of improving the consumer experience in the financial-services sector. FINQ has an expense ratio of 0.68% (FINQ overview).
Product closures in August:
- Calamos Focused Growth (CFGE)
- ETRACS Diversified High Income ETN (DVHI)
- ETRACS Monthly Pay 2x DJ International Real Estate ETN (RWXL)
- ETRACS Wells Fargo MLP Ex-Energy ETN (FMLP)
- ETRACS Wells Fargo MLP Index ETN (MLPW)
- ETRACS Daily Long-Short VIX ETN (XVIX)
- ETRACS ISE Exclusively Homebuilders ETN (HOMX)
- ETRACS S&P 500 Gold Hedged Index ETN (SPGH)
- ETRACS S&P 500 VEQTOR Switch Index ETN (VQTS)
- UBS AG FI Enhanced Big Cap Growth ETN (FBG)
- iShares B – Ca Rated Corporate Bond (QLTC)
- iShares Baa – Ba Rated Corporate Bond (QLTB)
- iShares Enhanced International Large-Cap (IEIL)
- iShares Enhanced International Small-Cap (IEIS)
- iShares Enhanced U.S. Large-Cap (IELG)
- iShares Enhanced U.S. Small-Cap (IESM)
- iShares Global Inflation-Linked Bond (GTIP)
- iShares International Inflation-Linked Bond (ITIP)
- iShares MSCI Emerging Markets Horizon (EMHZ)
- iShares MSCI Emerging Markets Latin America (EEML)
- SPDR Barclays International High Yield Bond (IJNK)
- SPDR BofA Merrill Lynch Emerging Markets Corp Bond (EMCD)
- SPDR MSCI EM 50 (EMFT)
- SPDR MSCI EM Beyond BRIC (EMBB)
- SPDR Nuveen Barclays Build America Bond (BABS)
- SPDR Nuveen Barclays California Muni Bond (CXA)
- SPDR Nuveen Barclays New York Muni Bond (INY)
- SPDR Russell/Nomura PRIME Japan (JPP)
- SPDR Russell/Nomura Small Cap Japan (JSC)
- SPDR S&P BRIC 40 (BIK)
- SPDR S&P International Mid Cap (MDD)
- SPDR SSgA Risk Aware (RORO)
- ProShares Short Investment Grade Corporate (IGS)
- ProShares Ultra Bloomberg Commodity (UCD)
- ProShares Ultra Homebuilders & Supplies (HBU)
- ProShares Ultra Investment Grade Corporate (IGU)
- ProShares Ultra MSCI Pacific Ex-Japan (UXJ)
- ProShares UltraShort Bloomberg Commodity (CMD)
- ProShares UltraShort Homebuilders & Supplies (HBZ)
- ProShares UltraShort Junior Miners (GDJS)
- ProShares UltraShort MSCI Pacific ex-Japan (JPX)
Product changes in August:
- EGShares EM Strategic Opportunities (EMSO) changed its ticker symbol back to EMDD on August 1.
- Huntington US Equity Rotation Strategy ETF (HUSE) dropped the Huntington prefix and changed its name to US Market Rotation Strategy (HUSE), effective August 8. The ETF is subadvised by Tuttle Tactical Management.
- VelocityShares Daily 2x VIX Short Term ETN (TVIX) executed a 1-for-25 reverse split effective August 9.
- iPathS&P 500 VIX Mid-Term Futures ETN (VXZ) and iPath S&P 500 VIX Short-Term Futures ETN (VXX) underwent 1-for-4 reverse splits on August 9.
- AccuShares Spot CBOE VIX Down Shares (VXDN) received a corrective distribution payable in shares of VXUP effective August 17.
- AccuShares Spot CBOE VIX Up Shares (VXUP) received a corrective distribution payable in shares of VXDN effective August 17.
- Direxion executed reverse splits on four ETFs (GASX, DRIP, DUST, and JDST) and forward splits on five ETFs (BRZU, DRN, TMF, NUGT, and JNUG) with an effective date August 25.
- SPDR Russell Small Cap Completeness (RSCO) changed its underlying index, name, and ticker symbol to become the SPDR S&P 1000 ETF (SMD) effective August 31. The S&P 1000 Index combines the stocks of the S&P MidCap 400 and the S&P SmallCap 600 benchmarks.
Announced product changes for coming months:
- AdvisorShares WCM/BNY Mellon Focused Growth ADR ETF (AADR) will change its subadvisor on September 1, becoming the AdvisorShares Dorsey Wright ADR ETF (AADR).
- The iShares iBonds Sep 2016 Term Muni Bond ETF (IBME) is scheduled to mature and will cease trading at the market’s close on September 1, 2016.
- AccuShares is leaving the ETF business and closing all four of its teeter-totter funds (VXUP, VXDN, OILU, and OILD), with September 8 being the last day of trading.
- Guggenheim Emerging Markets Real Estate ETF (EMRE) will close and liquidate with September 20 being the last day of trading.
- WisdomTree will close and liquidate six ETFs, with September 22 being the last day of trading. The affected funds are WisdomTree Global ex-U.S. Utilities (DBU), WisdomTree Global Natural Resources (GNAT), WisdomTree Commodity Currency Strategy (CCX), WisdomTree Commodity Country Equity (CCXE), WisdomTree Coal (TONS), and WisdomTree Japan Interest Rate Strategy (JGBB).
- The Global Industry Classification Standard (“GICS”) system is removing REITs from the Financials sector and reclassifying the group as the 11th sector named Real Estate. Most index providers and ETFs will be implementing the changes on September 16.
Previous monthly ETF statistics reports are available here.
Disclosure: Author has no positions in any of the securities, 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.