Invesco PowerShares announced plans to close 10 ETFs due to lack of investor interest. The last day of trading will be December 14, 2010. The firm is providing a full two-month notice, a move I consider to be shareholder-friendly. As always, I recommend shareholders avoid the liquidation process by selling all positions prior to the closure and use a limit order when selling.
The press release of October 8, 2010 (pdf) identifies the 10 ETFs as:
- PowerShares Dynamic Healthcare Services Portfolio (PTJ)
- PowerShares Dynamic Telecommunications & Wireless Portfolio (PTE)
- PowerShares FTSE NASDAQ Small Cap Portfolio (PQSC)
- PowerShares FTSE RAFI Europe Portfolio (PEF)
- PowerShares FTSE RAFI Japan Portfolio (PJO)
- PowerShares Global Biotech Portfolio (PBTQ)
- PowerShares Global Progressive Transportation Portfolio (PTRP)
- PowerShares NASDAQ-100 BuyWrite Portfolio (PQBW)
- PowerShares NXQ Portfolio (PNXQ)
- PowerShares Zacks Small Cap Portfolio (PZJ)
Most of these ETFs are based on solid investment strategies and themes. PNXQ, which targets stocks that are candidates to be added to the Nasdaq 100 Index, is one of my favorites. These days it takes more than a solid idea to survive.
Invesco PowerShares understands that this is a business, and unless products generate sufficient investor interest to generate a profit for the firm, they may have to be eliminated. This is not the first time the firm has closed a large group of funds – PowerShares closed 19 ETFs in May 2009.
Eight of the affected funds are listed in the current ETF Deathwatch, and the other two have made multiple appearances in 2010. However, there are 22 more products with the PowerShares brand on ETF Deathwatch, so the closing of these 10 funds does not clear the deck of low-asset PowerShares products.
The closure of PowerShares DB Crude Oil Double Long ETN (former ticker DXO) a little over a year ago was a unique situation. Instead of failing to attract investor interest, DXO was closed because it seemingly became too popular with investors and closed as a result of a “regulatory event” believed to be the CFTC enforcing position limits on crude oil contracts.
Disclosure covering writer, editor, publisher, and affiliates: 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.