PureFunds and Factor Advisors recently announced the closure and liquidation of two ETFs marketed under the PureFunds brand. PureFunds ISE Diamond/Gemstone ETF (NYSEARCA:GEMS) and PureFunds ISE Mining Service ETF (NYSEARCA:MSXX) will have their last day of trading on Thursday, January 23, 2014. Final liquidation is scheduled to occur on January 24.
As you may recall, the five ETFs from Factor Management and Factor Advisors with unbelievably high expense ratios and marketed under the FactorShares brand were scuttled last November. The firm chose to use the PureFunds brand when it rolled out three new ETFs a little over a year ago that were supposedly “pure plays” on selected industries.
All three PureFunds ETFs are on ETF Deathwatch. Two (GEMS and MSXX) are closing this week, but PureFunds ISE Junior Silver ETF (NYSEARCA:SILJ) is remaining open despite the fact it has only $1.4 million in assets and has lost 44% of its value since inception. The June 2013 edition of ETF Deathwatch proclaimed FactorShares In Jeopardy when 100% of its product line (five FactorShares ETFs and three PureFunds ETFs) became part of the list. Closing seven of the eight funds does not fix the problem – it is still a firm with only $1.4 million in assets and now has less than $12,000 in annual revenue.
In a press release dated January 10, Factor Advisors and PureFunds stated, “Effectively [sic] immediately, each Fund will increase its cash holdings in contemplation of its liquidation. As a result, through the Liquidation Date, each Fund will deviate from its investment objective and strategies, as stated in the Fund’s Prospectus, as it winds up its business and affairs.” In other words, the ETFs that are closing are no longer tracking their underlying indexes, which is one of the risks detailed in Five Steps to Avoid Disaster When Your ETF Closes.
Disclosure covering writer, editor, and publisher: 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.