ETF Deathwatch

Jan. 6.09 | About: iPath Dow (JJU)

That is the title of an article from someone named Ron Rowland. The article has a spreadsheet of 139 ETFs and ETNs that might be in trouble due to very low dollar volume. Exchange traded products are obviously becoming more and more a part of the portfolio landscape, providers have created over 700 funds so far and I'm not even sure if a third of them are profitable.

It would be reasonable to wonder whether anything from X-shares will be around a year from now but I doubt anything, no matter how obscure, from iShares/iPath is going anywhere. According to the Deathwatch the Barclays Global product with the lowest dollar volume is the iPath Aluminum ETN (NYSEARCA:JJU) with only $6118 worth of shares traded per day. Anyone thinking they have some particular insight with aluminum can probably buy JJU with confidence about it lasting. That same type of insight about the biofuels ETN from ELEMENTs might not work out as well (in terms of surviving).

I hope all the quirky products can survive, although I know not all of them can. Having 95% of your portfolio in normal broad based products and then allocating 4-5% to quirky things like tin, Norwegian fisheries (so such ETF exists) or anything else they come up with that you know a little something about is perfectly valid; the prices of tantalum and thorium won't go to zero even if they were to go down a lot (I am not aware of any ETPs for tantalum or thorium).

A couple of notes, iShares closed a couple of sub-sector ETFs in 2001 which for the ETF industry was a lifetime ago. Also iPath ETNs are obviously a debt obligation of Barclays Bank and so a failure of the bank would jeopardize the ETNs. The ETNs are part of the BGI division which last I looked was profitable and I believe would be an attractive asset in some sort of fire sale or other restructuring should it ever come to that but you should know the risk in case you decide to step up to a little cocoa.