ETF Deathwatch membership declined for the second month in a row as sponsors close ailing funds at a record pace and some struggling ETFs start to gain a foothold. Twelve additions, 13 removals due to improved health, and 15 removals due to closure produced a net decrease of 16. The count now stands at 444 (352 ETFs and 92 ETNs).
Although this is the first back-to-back reduction in 19 months, I do not believe it is the beginning of a new trend. Historically, the peaks and valleys of the Deathwatch membership count have lagged launch activity by one to two years. Launch quantities have been climbing steadily for three years, and the 41 introductions in September was the largest since February 2012.
Until there are clear signs that ETF launches have put in an interim peak, it is probably safe to say that the longer-term trend of Deathwatch membership increases remains intact. The primary wrinkle in this analysis is that actual product deaths and closures will also reduce the quantity of funds on this list. The 103 closures that took place in the first nine months of 2016 have already clinched a new calendar-year record, but many sponsors remain reluctant to pull the plug.
The average asset level of products on ETF Deathwatch declined from $7.1 million to $6.9 million, and the quantity of products with less than $2 million in assets shrank from 90 to 85. The average age slipped from 48.5 to 48.4 months, and the number of products more than 5 years of age dropped from 183 to 175.
The median fund has an asset level of $4.7 million and an expense ratio of 0.70%. That implies the median fund generates less than $33,000 in annual revenue. If all 444 of these products were rolled into one, it would still be smaller than 140 other ETFs with less than $3.1 billion in assets, but it would be profitable, since the revenue would not have to be shared with 443 others.
Here is the Complete List of 444 ETFs and ETNs on ETF Deathwatch for October 2016 compiled using the objective ETF Deathwatch Criteria.
The 12 ETFs and ETNs added to ETF Deathwatch for October:
- Global X Permanent ETF (NYSEARCA:PERM)
- iPath U.S. Treasury Long Bond Bear ETN (NASDAQ:DLBS)
- Principal Price Setters Index ETF (NASDAQ:PSET)
- Principal Shareholder Yield Index ETF (NASDAQ:PY)
- ProShares MSCI Emerging Markets Dividend Growers ETF (BATS:EMDV)
- ProShares Short Euro ETF (NYSEARCA:EUFX)
- ProShares UltraPro Financials ETF (NYSEARCA:FINU)
- SPDR S&P 1500 Momentum Tilt ETF (NYSEARCA:MMTM)
- SPDR S&P International Consumer Discretionary Sector ETF (NYSEARCA:IPD)
- Victory CEMP Emerging Market Volatility Weighted Index ETF (NASDAQ:CEZ)
- WisdomTree Barclays U.S. Aggregate Bond Zero Duration ETF (NASDAQ:AGZD)
- WisdomTree Dynamic Bearish U.S. Equity ETF (BATS:DYB)
The 13 ETPs removed from ETF Deathwatch due to improved health:
- Alerian Energy Infrastructure ETF (NYSEARCA:ENFR)
- BlueStar TA-BIGITech Israel Technology ETF (NASDAQ:ITEQ)
- UBS ETRACS CMCI Long Platinum Total Return ETN (NYSEARCA:PTM)
- First Trust Latin America AlphaDEX ETF (NYSEARCA:FLN)
- Guggenheim S&P 500 Equal Weight Real Estate ETF (NYSEARCA:EWRE)
- Guggenheim Wilshire Micro Cap ETF (NYSEARCA:WMCR)
- iPath DJ-UBS Nickel Total Return Sub-Index ETN (NYSEARCA:JJN)
- IQ 50 Percent Hedged FTSE Japan ETF (NYSEARCA:HFXJ)
- iShares Liquidity Income ETF (BATS:ICSH)
- iShares MSCI China Small-Cap ETF (NYSEARCA:ECNS)
- John Hancock Multifactor Consumer Discretionary ETF (NYSEARCA:JHMC)
- KraneShares Bosera MSCI China A ETF (NYSEARCA:KBA)
- PowerShares Dynamic Networking Portfolio ETF (NYSEARCA:PXQ)
The 15 ETPs removed from ETF Deathwatch due to delisting:
- AccuShares Spot CBOE VIX Down (NASDAQ:VXDN)
- AccuShares Spot CBOE VIX Up (NASDAQ:VXUP)
- DB Base Metals Long ETN (NYSEARCA:BDG), delisted but not liquidated
- DB 3x German Bund Futures ETN (NYSEARCA:BUNT)
- DB 3x Long 25+ Treasury Bond ETN (NYSEARCA:LBND)
- DB German Bund Futures ETN (NYSEARCA:BUNL)
- DB Inverse Japanese Govt Bond Futures ETN (NYSEARCA:JGBS)
- DB Japanese Govt Bond Futures ETN (NYSEARCA:JGBL)
- Guggenheim Emerging Markets Real Estate (NYSEARCA:EMRE)
- WisdomTree Coal Fund (NYSEARCA:TONS)
- WisdomTree Commodity Country Equity (NYSEARCA:CCXE)
- WisdomTree Commodity Currency Strategy (NYSEARCA:CCX)
- WisdomTree Global ex-U.S. Utility (NYSEARCA:DBU)
- WisdomTree Global Natural Resources (NYSEARCA:GNAT)
- WisdomTree Japan Interest Rate Strategy (NASDAQ:JGBB)
Disclosure: Author has no positions in any of the securities mentioned and no positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) is received from, or on behalf of, any of the companies or ETF sponsors mentioned.