ETF Deathwatch For August 2014: Largest Jump In 23 Months

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 |  Includes: ACIM, EWEM, FWDB, FWDD, ICOL, SMIN, TZY, YDIV
by: Ron Rowland

ETF Deathwatch membership rolls swelled by twenty-three products for August, the largest one-month jump since September 2012. Thirty-one new names joined the list while only eight escaped. With 325 products now on the list, consisting of 226 ETFs and 99 ETNs, the two-year downward trend in membership growth may have come to an end.

Sixteen (more than half) of the additions have prominent international characteristics, and three have a commodity orientation. Despite the fact sponsors are tripping over themselves to bring out "smart beta" ETFs, and analysts numbly extol these products' virtues, nine of this month's additions fit that definition. The count jumps to a dozen if you believe adding a currency hedge to a traditional beta fund gives it the smart beta designation.

When leveraged ETFs were introduced, many investors did not fully grasp the implications of the leverage being reset daily. Sponsors were cognizant of the potential for these funds to implode if the underlying index moved far enough in a single day and therefore tended to limit most leveraged funds to 200% exposure. As sponsors became more comfortable with the mechanics of hedging their fund against a total loss, 300% funds arrived on the scene.

With long-term investors avoiding leveraged products, and highly active traders preferring the convenience and power of 300% exposure, there has been a noticeable migration from 2x to 3x trading products. This also shows up in the ETF Deathwatch composition, with the ranks of 2x products growing significantly faster than 3x products. For August, 54 of the names on the list have +/- 200% exposure, while only 19 have +/- 300% exposure. Granted, there are more 2x than 3x products (135 versus 84), but even on a percentage basis, ETF Deathwatch membership is skewed toward 2x products (40% versus 23%).

The average age of products on the list slid from 44.2 to 43.9 months, and 88 are now more than five years in age. The average asset size is $6.5 million, down from $6.8 million a month ago, and 59 have asset levels below $2 million.

Here is the Complete List of 325 Products on ETF Deathwatch for August 2014 compiled using the objective ETF Deathwatch Criteria.

The 31 ETPs added to ETF Deathwatch for August:

  1. ColumbiaSelect Large Cap Growth (NYSEARCA:RWG)
  2. Credit Suisse Commodity Benchmark ETN (NYSEARCA:CSCB)
  3. Deutsche X-trackers MSCI AW ex US Hedged Equity (NYSEARCA:DBAW)
  4. Deutsche X-trackers MSCI Mexico Hedged Equity (NYSEARCA:DBMX)
  5. Deutsche X-trackers MSCI South Korea Hedged Equity (NYSEARCA:DBKO)
  6. Direxion Daily FTSEEuropeBear 3x Shares (NYSEARCA:EURZ)
  7. EGShares TCW EM Intermediate Term Investment Grade Bond (NYSEARCA:IEMF)
  8. EGShares TCW EM Long Term Investment Grade Bond (NYSEARCA:LEMF)
  9. EGShares TCW EM Short Term Investment Grade Bond (NYSEARCA:SEMF)
  10. ETRACS CMCI Silver TR ETN (NYSEARCA:USV)
  11. First Trust High Income (NASDAQ:FTHI)
  12. First Trust Low Beta (NASDAQ:FTLB)
  13. First Trust NASDAQ Rising Dividend Achievers (NASDAQ:RDVY)
  14. Global X Junior Miners (NYSEARCA:JUNR)
  15. iShares Industrial/Office Real Estate Capped (NYSEARCA:FNIO)
  16. iShares MSCI Emerging Markets Latin America (NASDAQ:EEML)
  17. iShares Retail Real Estate Capped (NYSEARCA:RTL)
  18. Market Vectors MSCI Emerging Markets Quality (NYSEARCA:QEM)
  19. Market Vectors MSCI Emerging Markets Quality Dividend (NYSEARCA:QDEM)
  20. Market Vectors MSCI International Quality (NYSEARCA:QXUS)
  21. Market Vectors MSCI International Quality Dividend (NYSEARCA:QDXU)
  22. PowerShares DB German Bund Futures ETN (NYSEARCA:BUNL)
  23. PowerShares KBW Property & Casualty Insurance (NYSEARCA:KBWP)
  24. PowerShares NYSE Century Portfolio (NYCC)
  25. ProShares Ultra MSCIBrazilCapped (NYSEARCA:UBR)
  26. ProShares Ultra Russell2000 Growth (NYSEARCA:UKK)
  27. RBSChinaTrendpilot ETN (NYSEARCA:TCHI)
  28. SPDR MFS Systematic Core Equity ETF (NYSEARCA:SYE)
  29. SPDR MFS Systematic Growth Equity ETF (NYSEARCA:SYG)
  30. SPDR MFS Systematic Value Equity ETF (NYSEARCA:SYV)
  31. SPDR S&P International Consumer Discretionary (NYSEARCA:IPD)

The 8 ETPs removed from ETF Deathwatch due to improved health:

  1. AdvisorShares Madrona Domestic (NYSEARCA:FWDD)
  2. AdvisorShares Madrona Global Bond (NYSEARCA:FWDB)
  3. First Trust International Multi-Asset Diversified Income (NASDAQ:YDIV)
  4. Guggenheim MSCI Emerging Markets Equal Weight (NYSEARCA:EWEM)
  5. iShares MSCI Colombia Capped (NYSEARCA:ICOL)
  6. iShares MSCI India Small-Cap (BATS:SMIN)
  7. iShares Target Date 2050 (NYSEARCA:TZY)
  8. SPDR MSCI ACWI IMI (NYSEARCA:ACIM)

ETPs removed from ETF Deathwatch due to delisting:

None

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.