ETF Deathwatch For June 2013: FactorShares In Jeopardy

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Includes: BXUC, DYY, EMSA, FLAT, FSE, FSG, GEMS, GIY, MFSA, MLPS
by: Ron Rowland

ETF Deathwatch membership rolls increased by eight for June, with 14 new additions and six departures. New members consist of six ETFs and eight ETNs, while all six products leaving are ETFs. As June gets under way, the ETF Deathwatch membership count stands at 342, consisting of 229 ETFs and 113 ETNs.

All new product introductions receive a six-month grace period from ETF Deathwatch. Nine products debuted in November 2012, making this the first month they are eligible. Seven of these nine are joining the list, a grim reminder of the difficulty new launches face in this environment.

Four of the ETFs moving directly out of the grace period and on to the Deathwatch list are ETNs bearing the RBS Rogers Enhanced Commodity name. The other three are ETFs with the new PureFunds brand from FactorShares. Five previously existing FactorShares ETFs are long-time members of ETF Deathwatch, meaning that 100% of their product lineup is now part of the membership list.

FactorShares underwent a transformation about a year ago when Gencap Ventures acquired it, with the intent of becoming a turnkey ETF launch platform. However, its existing lineup is in jeopardy and attracting new assets will be a difficult task. This is because ETFs carrying the FactorShares name have ridiculously high total expense ratios, ranging from a low of 9.68% for FactorShares 2X: Gold Bull/S&P500 Bear (NYSEARCA:FSG) to a high of 33.70% for FactorShares 2X: S&P500 Bull/TBond Bear (NYSEARCA:FSE). It continues to amaze me that regulators allow such products to exist, but I guess as long as this travesty is disclosed deep on page 25 of the prospectus (page 35 of the PDF), then it is OK.

Seven products went the entire month of May without any trades. Both iPath Short Enhanced MSCI EAFE ETN (NYSEARCA:MFSA) and iPath Short Enhanced MSCI Emerging Markets (NYSEARCA:EMSA) have yet to post their first trade of 2013. A total of 145 ETPs had zero volume on the last day of the month. In other words, on any given day nearly 10% of the listed ETPs do not trade. This is not "low" liquidity, this is "no" liquidity.

Complete List of 342 Products on ETF Deathwatch for June 2013

The 14 ETPs added to ETF Deathwatch for June:

  1. Barclays ETN+ S&P 500 2x Long C ETN (NYSEARCA:BXUC)
  2. ETRACS 1x Monthly Short Alerian MLP ETN (NYSEARCA:MLPS)
  3. Guggenheim Enhanced Core Bond (NYSEARCA:GIY)
  4. iPath US Treasury Flattener ETN (NASDAQ:FLAT)
  5. PowerShares DB Commodity Double Long ETN (NYSEARCA:DYY)
  6. PureFunds ISE Diamonds/Gemstone (NYSEARCA:GEMS)
  7. PureFunds ISE Junior Silver (NYSEARCA:SILJ)
  8. PureFunds ISE Mining Service (NYSEARCA:MSXX)
  9. QuantSharesU.S.Market Neutral Anti-Beta (NYSEARCA:BTAL)
  10. RBSRogersEnhanced Agriculture ETN (NYSEARCA:RGRA)
  11. RBSRogersEnhanced Energy ETN (NYSEARCA:RGRE)
  12. RBSRogersEnhanced Industrial Metals ETN (NYSEARCA:RGRI)
  13. RBSRogersEnhanced Precious Metals ETN (NYSEARCA:RGRP)
  14. SPDR S&P Software & Services (NYSEARCA:XSW)

The six ETPs removed from ETF Deathwatch due to improved health:

  1. Direxion All Cap Insider Sentiment (NYSEARCA:KNOW)
  2. iShares MSCI Far East Financials Sector (NASDAQ:FEFN)
  3. iShares MSCI World (NYSEARCA:URTH)
  4. Market VectorsIndonesiaSmall-Cap (NYSEARCA:IDXJ)
  5. SPDR S&P International Technology (NYSEARCA:IPK)
  6. WisdomTree Large Cap Value (NYSEARCA:EZY)

Disclosure: 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.