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The ETF industry has been experiencing exponential growth over the past few years, as we are now able to choose from more than 1,400 products with well over $1 trillion in combined assets. But as with any budding industry, there comes a time when it is necessary to trim the fat so to speak, and upkeep the quality of options available. As a result, the past few months have seen a fair amount of funds close that simply failed to attract investor attention [see also Doomsday Special: 7 Hard Asset Investments You Can Hold in Your Hand].

While no issuer enjoys shuttering a fund, it is simply a growing pain associated with such a young industry. As the number of ETFs available continues to skyrocket, so too will the number of funds that are no longer useful or popular among the investing world. When most investors hear that their ETF position is soon to close, they are struck with panic and contemplate selling out immediately. An ETF closing is not necessarily a bad thing, just more of a hassle. When a fund closes, investors are given their money back; however, selling prematurely can sometimes lead to bigger losses than simply holding on to the fund until liquidation [see also How To Survive An ETF Liquidation].

Closing Time?

ETFs closing their doors is a necessary evil. Nonetheless, it is an occurrence that will likely become more common as the industry continues its rapid expansion for years to come. After examining the current state of the industry, we have developed a list of 15 equity funds that may be in danger of closing. Our criteria for this list was limited to funds that were more than two years old, with AUM under $5 million, and a three month average daily trading volume below 2,000 shares. While it is by no means a guarantee that these funds will close down, they are certainly circling the drain as far as their lifespan is concerned. Below, we list the equity funds that may be in danger of being terminated by their respective issuers if they cannot attract more attention and inflows [see also The 10 Most Actively Traded ETFs In The World]:

Ticker ETF Assets (In Millions) Avg. Volume Inception Date
RPX Growth Equity Strategy Fund $1.489 1,554 10/12/2009
EEH SPECTRUM Lg Cap U.S. Sector ETN $1.495 1,055 08/01/2007
SMK UltraShort MSCI Mexico $1.938 892 06/16/2009
JPX UltraShort MSCI Pacific ex-Japan $1.963 1085 06/16/2009
AXFN MSCI ACWI ex US Financials Sector Index Fund $2.189 553 01/20/2010
FEFN MSCI Far East Financials Sector Index Fund $2.434 217 01/20/2010
EEN EW Euro-Pacific LDRs ETF $2.714 1,024 03/01/2007
GWO CS Global Warming ETN $2.848 1,926 04/01/2008
GVT Concentrated Large Cap Value Strategy Fund $2.961 827 05/04/2009
FGEM Financials GEMS ETF $3.217 1,577 09/16/2009
KME SPDR KBW Mortgage Finance ETF $3.631 913 04/29/2009
UWC Ultra Russell3000 $4.393 1,078 06/30/2009
PSTL Global Steel Portfolio $4.425 1,002 09/18/2008
QQQC NASDAQ China Technology ETF $4.740 1,937 12/08/2009
BXDB Barclays Short B Leveraged Inverse S&P 500 TR ETN $4.822 1,450 11/17/2009

Disclosure: No positions at time of writing.

Disclaimer: ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. From time to time, issuers of exchange-traded products mentioned herein may place paid advertisements with ETF Database. All content on ETF Database is produced independently of any advertising relationships.

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