Seeking Alpha
Registered investment advisor, ETF investing, long-term horizon
Profile| Send Message|
( followers)  

The number of exchange-traded products on Deathwatch decreased for the second month in a row. It would be premature to declare that the peak is now behind us, because I would not be surprised to see additional recession-related declines in trading activity for some ETFs in the months ahead. This month’s list contains 155 names, down from 162 last month and down from the record high of 171 for the March list. The current list consists of 114 ETFs and 41 ETNs that are at least six months old and failed to have an Average Daily Value Traded (ADVT) of at least $100,000 during April.

Elements Ben Graham Large Cap Value ETN (NYSE:BVL) heads up the list this month with a pathetic 38 shares traded per day - an ADVT of just $242. Closer inspection reveals that BVL only traded on five separate days in April, and its highest-volume day was just 200 shares. The two other Elements Ben Graham products are on the list as well. The second entry on the list is Barclays GEMS Asia 8 ETN (NYSEARCA:AYT) which only traded one day last month. A grand total of 400 shares traded hands, all on April 7.

PowerShares has the largest number of products on the list with 37 (30 ETFs, 6 ETNs, and 1 BLDR), or nearly 24% of the list. PowerShares took a step last Friday to improve their standing by announcing the closure of 19 ETFs. However, only ten of those funds are on ETF Deathwatch. That means that after the closures, there will still be 26 PowerShares products on ETF Deathwatch plus one BLDR, which is now sponsored by PowerShares.

Clearly, more than just trading activity goes into the decision of whether or not to close an ETF. One potentially better gauge is assets under management (AUM) for the fund. However, getting AUM data in a timely manner is tough, and then one would need to determine what percentage is “real investor” money versus “seed money” from the sponsor. Nearly every fund on this list is composed primarily of the original seed money. I have found that ADVT does a great job of pointing out where the problems are.

It has also been suggested that perhaps looking at the creation/redemption ratio can provide additional insights. However, look again at the volume for the ETFs on this list, keeping in mind that most ETFs can only create new shares in blocks of 50,000 shares. If an ETF is only trading 2,000 shares per day, then 25 days of trading volume are needed to create new shares, assuming that all 25 days of activity were “buy” oriented and drove demand for new share creation. BVL would need more than five years of trading volume to equal one creation unit. For the most part, there are no new shares be created or redeemed for the products on this list.

This brings up another point: If there is not enough volume to justify the creation or redemption of shares, then it is not possible to keep the price aligned with the indicative value. The funds on this list are more likely than others to be trading at premiums and discounts to their value.

The fund’s sponsor also has a bearing on whether or not a given fund is ultimately closed. For example, the iShares and SPDR products on the list have a reasonable chance of survival since they are part of broad and successful product lines. Also, I don’t expect the four HOLDRS products on the list to liquidate anytime soon either. Their expenses were covered years ago and the sponsor is just sitting back collecting the fees. I have them on this list to warn potential buyers that there are liquidity concerns with these products. The risk of liquidation might be lower than with other products, but you still have to wonder if someone is going to take the other side of your trade when it comes time for you to sell.

ETF Deathwatch - May 2009

Rank Ticker Name Age (mths) Avg Daily Volume Avg Daily Value Traded
1 BVL Elements Ben Graham Large Cap Value ETN 9 38 $242
2 AYT Barclays GEMS Asia 8 ETN 8 19 $828
3 BVT Elements Ben Graham Total Mkt Value ETN 9 171 $1,171
4 UBN E-TRACS CMCI Energy Total Return ETN 13 100 $1,278
5 PTD E-TRACS CMCI Short Platinum Exc Ret ETN 12 43 $1,529
6 MZO Claymore/Mrngstr Services SuperSector 21 138 $1,822
7 MZN Claymore/Mrngstr Inform. SuperSector 21 205 $3,197
8 USV E-TRACS CMCI Silver Total Return ETN 13 200 $3,562
9 UBD Claymore U.S. Capital Markets Bond ETF 15 81 $3,683
10 GBB iPath GBP/USD Exchange Rate ETN 24 100 $3,979
11 JFT First Trust Enhanced 130/30 Large Cap ETN 11 190 $4,190
12 PTRP PowerShares Glb Progressive Transport. 7 248 $4,480
13 STH Claymore/Sabrient Stealth 32 429 $4,942
14 BHH HOLDRS B2B Internet ETF 112 16,548 $5,045
15 EEH Elements Spec LgCap US Sector Mo ETN 21 833 $5,624
16 JEM Barclays GEMS Currency Index ETN 15 143 $5,725
17 UBC E-TRACS CMCI Livestock Total Return ETN 13 300 $5,773
18 PWD PowerShares FTSE RAFI Europe Small Mid 19 638 $7,001
19 INR Market Vectors Indian Rupee/USD ETN 14 200 $7,001
20 JJT iPath DJ AIG Tin ETN 10 281 $7,702
21 GWO Elements CS Global Warming ETN 13 1,605 $8,131
22 RTW Rydex Inverse 2x S&P Technology 11 229 $8,502
23 CZA Claymore/Zacks Mid-Cap Core ETF 25 552 $9,062
24 GCE Claymore CEF Index GS Connect ETN 17 800 $9,181
25 FUE Elements MLCX Biofuels ETN 15 1,362 $9,557
26 OTR Claymore/Ocean Tomo Growth 25 624 $10,787
27 OTP Claymore/Ocean Tomo Patent 29 671 $11,416
28 IFEU iShares FTSE/EPRA NAREIT Europe 18 581 $11,888
29 JJS iPath DJ AIG Softs ETN 10 333 $12,109
30 IPU SPDR S&P International Utilities 9 776 $14,086
31 IPK SPDR S&P International Technology 9 795 $14,645
32 DOY MacroShares $100 Oil Down 10 1,948 $15,444
33 ROB Claymore/Robb Report Global Luxury 21 1,405 $15,860
34 CRO Claymore/Zacks Country Rotation 22 1,338 $15,954
35 ERO iPath EUR/USD Exchange Rate ETN 24 319 $16,386
36 GRU Elements MLCX Grains Total Return ETN 15 2,857 $16,875
37 FVI First Trust Value Line Equity Allocation 29 1,414 $17,322
38 IIH HOLDRS Internet Infrastructure 112 8,748 $18,056
39 PEH PowerShares Dynamic Europe Portfolio 23 1,790 $18,214
40 PHW PowerShares Dynamic Hrdwr & Cons Elec 41 2,162 $18,940
41 JYN iPath JPY/USD Exchange Rate ETN 24 324 $19,511
42 MKH HOLDRS Merrill Lynch Market 2000+ 106 500 $19,930
43 PQSC PowerShares FTSE Nasdaq Small Cap 13 1267 $20,548
44 DPU PowerShares DB Commodity Long ETN 12 1,567 $20,757
45 BOS PowerShares DB Base Metals Sht ETN 11 557 $20,851
46 EXB Claymore/Clear Global Exchanges & Brokers 22 2,052 $20,851
47 FPX First Trust IPOX-100 Index Fund 37 1,471 $20,949
48 IST SPDR S&P International Telecom 9 1,152 $21,237
49 UAG E-TRACS CMCI Agriculture TR ETN 13 1,148 $21,256
50 UCI E-TRACS CMCI Total Return ETN 13 1,414 $21,291
51 FDD First Trust DJ STOXX Select Dividend 30 20 2,176 $21,473
52 ADZ PowerShares DB Agriculture Short ETN 13 633 $22,807
53 JPP SPDR Russell/Nomura PRIME Japan 30 729 $23,113
54 PMA PowerShares Active Mega-Cap Portfolio 13 1,310 $23,336
55 RHO Rydex Inverse 2x S&P Health Care 10 390 $23,381
56 FUD E-TRACS CMCI Food Total Return ETN 13 1,276 $24,383
57 UEM Claymore U.S.-1-The Capital Markets 15 690 $24,530
58 BSC Elements Ben Graham Small Cap Value ETN 9 3,538 $24,682
59 LVL Claymore/BBD High Income 23 2,795 $25,625
60 IPS SPDR S&P International Consumer Staples 9 1,300 $25,706
61 UBM E-TRACS CMCI Industrial Metals TR ETN 13 1,914 $26,380
62 PBTQ PowerShares Global Biotech Portfolio 7 1,348 $26,610
63 JJP iPath DJ AIG Precious Metals ETN 10 586 $26,901
64 PJO PowerShares FTSE RAFI Japan 23 867 $27,116
65 DOD Elements Dogs of the Dow Total Return ETN 18 5,490 $27,550
66 PGD Barclays Asian&Gulf Currency Reval. ETN 11 567 $28,134
67 BDG PowerShares DB Base Metals Lng ETN 11 1,905 $28,548
68 WMW Elements Mrngstr Wide Moat Focus ETN 19 3,848 $28,889
69 IRY SPDR S&P International Health Care 9 1,348 $29,431
70 CSD Claymore/Clear Spin-Off ETF 29 2,371 $29,497
71 PSTL PowerShares Global Steel Portfolio 7 2,233 $30,511
72 PNXQ PowerShares Nasdaq Next Q 13 1,819 $30,938
73 URR Market Vectors Double Long Euro ETN 12 1,076 $30,981
74 PAO PowerShares Auto Balanced Growth NFA 12 3,443 $31,238
75 PQY PowerShares Active AlphaQ 13 1,976 $32,343
76 EEN Claymore/Robeco Developed Intl Equity 26 2,619 $33,358
77 XGC Claymore/Great Companies Lg-Cap Growth 25 2,605 $34,684
78 EKH HOLDRS Europe 2001 101 800 $34,801
79 FFR First Trust FTSE EPRA/NAREIT Gbl Real Es 20 1,710 $35,268
80 MZG Claymore/Mrngstr Manufact. SuperSector 21 2,243 $35,571
81 IPN SPDR S&P International Industrial 9 2,124 $35,950
82 EEZ WisdomTree Earnings Top 100 Fund 27 1,333 $36,141
83 PRY PowerShares FTSE RAFI Intl Real Estate 16 3,362 $36,845
84 PTO PowerShares Auto Growth NFA 12 4,581 $37,639
85 DEF Claymore/Sabrient Defender 29 2,319 $38,066
86 GRN iPath Global Carbon ETN 10 1,557 $38,079
87 DPC WisdomTree Intl Consumer Cyclical 31 2,567 $38,632
88 EU WisdomTree Dreyfus Euro 12 1,805 $38,675
89 UBG E-TRACS CMCI Gold Total Return ETN 13 1,562 $39,591
90 DEW WisdomTree Europe High-Yielding Equity 35 1,390 $40,302
91 FRN Claymore/BNY Mellon Frontier Markets 11 3,371 $40,740
92 IPW SPDR S&P International Energy 9 2,129 $41,365
93 IFNA iShares FTSE NAREIT North America 18 1,952 $41,502
94 PRFG PowerShares FTSE RAFI Consumer Goods 32 1,390 $42,824
95 TLL ProShares UltraShort Telecom 13 1,205 $43,354
96 RYJ Claymore/Raymond James Strong Buy Eq 8 3,933 $44,122
97 AFK Market Vectors Africa ETF 10 2,190 $45,674
98 AGF PowerShares DB Agriculture Long ETN 13 2,910 $46,608
99 IRO Claymore/Zacks Dividend Rotation 18 3,686 $46,721
100 DDP PowerShares DB Commodity Short ETN 12 995 $47,711
101 IFSM iShares FTSE Dev Small Cap ex-N. Amer 18 2,148 $48,815
102 REC Rydex Inverse 2x S&P Energy 11 4,776 $50,231
103 FNX First Trust Mid Cap Core AlphaDEX 24 2,900 $52,689
104 RHS Rydex S&P Equal Weight Cons Staples 30 1,357 $52,762
105 PDQ PowerShares FTSE RAFI A-Pac x-Jpn Sml Md 19 4,700 $52,944
106 PNQI PowerShares Nasdaq Internet 11 3,148 $53,669
107 GRI Cohen & Steers Global Realty Majors 12 2,519 $53,974
108 IPD SPDR S&P International Consumer Discr 9 2,829 $54,281
109 RTL iShares FTSE NAREIT Retail 24 3,729 $54,584
110 UOY MacroShares $100 Oil Up 10 17,043 $55,360
111 RHM Rydex 2x S&P Health Care 11 1,433 $56,833
112 ICI iPath Optimized Currency Carry ETN 13 1,424 $63,111
113 FAD First Trust Multi Cap Growth AlphaDEX 24 3,571 $63,298
114 PJG PowerShares Dynamic Mid Cap 29 4,033 $63,724
115 PHJ PowerShares High Gr. Rate Div Achievers 44 7,819 $65,955
116 IPF SPDR S&P International Financial 9 4,752 $67,264
117 ADRU BLDRS Europe 100 ADR 79 4,495 $68,281
118 EXT WisdomTree Total Earnings 27 2,362 $69,723
119 PIZ PowerShares DWA Dev Mkts Tech Ldrs 16 5,729 $71,103
120 NFO Claymore/Sabrient Insider 32 4,038 $71,271
121 PBS PowerShares Dynamic Media 47 9,176 $71,538
122 PDN PowerShares Dev Markets ex-US Small-Mid 19 5,190 $72,281
123 UHN United States Heating Oil Fund LP 13 3,576 $74,282
124 PLK PowerShares Active Low Duration 13 2,948 $74,338
125 LD iPath DJ AIG Lead ETN 10 1,948 $74,494
126 JJE iPath DJ AIG Energy ETN 18 3,338 $74,505
127 FXR First Trust Industrials AlphaDex 24 7,233 $74,793
128 FEX First Trust Large Cap Core AlphaDEX 24 4,486 $75,074
129 RYT Rydex S&P Equal Weight Technology 30 2,386 $75,628
130 TDD TDX Independence 2010 19 3,514 $77,602
131 CNY Market Vectors Chinese Renminbi/USD ETN 14 1,919 $78,062
132 PJM PowerShares Dynamic Small Cap 29 5,629 $79,750
133 PIQ PowerShares Dynamic Magniquant 31 4,952 $80,708
134 RGI Rydex S&P Equal Weight Industrials 30 2,543 $81,104
135 DNL WisdomTree Japan Hi-Yield Equity 35 2,210 $82,362
136 FTC First Trust Large Cap Growth Op AlphaDEX 24 4,719 $83,302
137 EZM WisdomTree Mid Cap Earnings 27 2,833 $83,585
138 HGI Claymore/Zacks Intl Yield Hog Index ETF 22 7,310 $84,673
139 FYX First Trust Small Cap Core AlphaDEX 24 5,076 $85,557
140 EZY WisdomTree Low P/E 27 3,243 $85,913
141 PFP PowerShares International Listed Private Eq 19 10,552 $87,399
142 PVM PowerShares Dynamic Deep Value 29 5,629 $87,814
143 TDX TDX Independence In-Target 19 3,700 $87,949
144 RPV Rydex S&P 500 Pure Value 38 6,514 $90,036
145 DXJ WisdomTree Japan Total Dividend 35 2,648 $90,902
146 QQXT First Trust Nasdaq-100 Ex-Technology 27 7,152 $92,231
147 PZJ PowerShares Zacks Small Cap 39 6,795 $92,944
148 FIO iShares FTSE NAREIT Industrial Office 24 6,238 $94,464
149 DFE WisdomTree Europe SmallCap Dividend 35 3,743 $95,488
150 RYU Rydex S&P Equal Weight Utilities 30 2,548 $95,833
151 DBR WisdomTree Intl Health Care 31 5,462 $96,693
152 JJU iPath DJ AIG Aluminum ETN 10 4,348 $96,952
153 BAL iPath DJ-AIG Cotton ETN 10 3,433 $97,230
154 PGZ PowerShares Dynamic Aggressive Growth 29 6,329 $97,878
155 PTJ PowerShares Dynamic Healthcare Services 31 6,529 $98,611

Disclosure: no positions.

Source: ETF Deathwatch for May 2009