The Cambria Shareholder Yield ETF (SYLD), launched May 14, is an actively managed ETF employing a quantitative algorithm to select companies with strong emphasis on returning free cash flow to their shareholders. In addition to cash dividends, net share repurchases and reducing debt are the two other major factors considered.

Specifically, SYLD invests in 100 stocks with market caps greater than $200 million that rank among the highest in (a) paying cash dividends, (b) engaging in net share repurchases, and (c) paying down debt on their balance sheets. The manager believes that a focus on all three factors – a trio collectively known as shareholder yield – produces a portfolio of companies that offer strong free cash flow characteristics.

The SYLD Investment Case asserts the following: focusing on dividends alone misses the broader picture, share repurchases have historically outpaced dividends, free cash flow is a classic value investment approach,

The number of ETF Deathwatch constituents rises by 10 for May, breaking a streak of declining counts stretching back to October of last year. Eighteen new names join the list, including 14 ETFs and four ETNs. Seven ETFs had improved health and escaped. One ETF underwent “voluntary” delisting in April, becoming the 342nd ETP that is no longer among the living. ETF Deathwatch membership now stands at 334 (229 ETFs and 105 ETNs).

STREAM S&P Dynamic Roll Commodities Fund (BNPC) was the single ETF delisted in April. It provides a real-time example of why investors should sell shares prior to delisting and avoid the liquidation process. BNP Paribas, the sponsor of the ETF formerly known as BNPC, did not liquidate the portfolio and has not announced any plans to do so. The BNPC website has been taken down. Technically, the fund still exists as CUSIP 86324B103. If you

Alerian MLP ETF (AMLP), the first ETF structured as a C corporation, issued a prospectus update on March 31, 2013 (PDF). Total annual fund operating expenses decreased from 4.86% to 4.85%, resulting in a non-perceptible change that did not warrant a company press release. Furthermore, the document now identifies the bulk of these expenses as a "Deferred Income Tax Expense" rather than the previous label of "Other Expenses."

However, the footnotes explain this is just an "estimate," because any estimate of deferred income tax expense "cannot be reliably predicted." Their words, not mine. They are essentially claiming it is an estimate of something that cannot be estimated. The document further contradicts itself by stating, "The Fund's accrued deferred tax liability, if any, is reflected each day in the Fund's net asset value per share." In other words, it's not an estimate at all and is known with enough precision

Launches reached their highest level in 14 months during April, with 21 products achieving new listing status. Only one closure occurred, allowing the year-to-date net change in listings to become positive at +14. The exchange traded product count stood at 1,459 as April ended, consisting of 1,251 ETFs and 208 ETNs.

Unlike March, where 100% of new offerings were income oriented, April's new arrivals had a good mixture of objectives: Two frontier funds, five emerging market ETFs (two with 3x leverage), three international dividend plays, three factor products (plus two actively managed ETFs using those factor tilts), five target maturity bond funds, and a silver covered-call ETN.

April's sore point was the decision by BNP Paribas to delist the STREAM S&P Dynamic Roll Commodities Fund (former ticker BNPC) without liquidating it. I vehemently warned the ETF community that BNP Paribas was not planning to liquidate this ETF, and unfortunately,

BlackRock announced (pdf) it would be closing the iShares Diversified Alternatives Trust (ALT) due to client feedback on the ETF's limited application in portfolios and lack of long-term demand for the product. The last day of trading will be May 28, with liquidation and final distributions targeted for completion by June 4, 2013.

Launched in November 2009, ALT was the first ETF from iShares that sought to provide alpha instead of just beta exposure. The actively managed ETF has stated objectives of 6%-8% annualized standard deviation and a Sharpe ratio of 0.50 to 0.75, which translates to annual returns of 4%-7%. Since inception, ALT has generated just a +0.9% annual return at 6.7% standard deviation, for about a 0.12 Sharpe ratio.

The closure is somewhat surprising as ALT is not a zombie ETF, and there are at least 39 other iShares in worse shape on ETF Deathwatch.

It seems as if everyone wants to label something a "bubble" these days. There is a bubble in bubbles. Interest rates have been falling for 32 years now. As rates fall, bond prices rise and vice versa. It has been a multi-decade bull market for bonds. Unlike stocks, which have no upper price limit, bond prices are theoretically limited on the upside as a function of interest rates and maturity dates. Once bonds mature, any remaining price premium will disappear. With these relationships intact, it is no surprise that predictions of the bond market's imminent collapse began to appear as interest rates fell to historic lows in 2008.

The "bond bubble" is now well into its fifth year. Investors heeding the warnings of bond market fear-mongers missed an opportunity for substantial gains. The iShares Barclays Aggregate Bond ETF (AGG) generated a cumulative total return of more than 23% since the

The number of ETF Deathwatch constituents dropped by 18 for April, continuing an improvement trend that commenced last September. In ETF Deathwatch for September 2012, I predicted the 403 members could represent a short-term peak and gave my reasons why. This month's count of 324 (223 ETFs and 101 ETNs) is 79 less than the previous high, a non-trivial 19.6% reduction. It is also the lowest quantity of the past 11 months.

Peaks in Deathwatch membership tend to lag peaks in new product introduction by about a year. The same can be said about troughs, as a healthy and growing industry gradually absorbs the available products. Launches are currently occurring at their slowest pace since 2006. Therefore, if these relationships hold up in the future, I expect the number of products on Deathwatch to decline further throughout 2013.

We've been hearing about the imminent wave of actively managed ETFs arriving

The S&P 500 finally regained all it had lost in the 2008-2009 “financial crisis” bear market just last week. It put in another new high this week. The index consists of 10 major sectors, and as you have probably surmised, not all of them are celebrating the rebound. In fact, only five of the ten managed to establish a new high in the past month. One would think that new index highs would produce something better than a 50% participation rate. However, since the S&P 500 is a weighted-average of the underlying sectors, it makes sense that about half are doing better and half are not.

The price-based version of the index the financial media reports on every day does not account for dividends. With dividends reinvested, the S&P 500 actually surpassed its old high last August. Since including dividends provides a better comparison, we’ll use dividend-adjusted data in our

Only five new exchange traded products (“ETPs”) came to market in March, tying January for the lowest introduction rate since August 2009. Closures were double the number of launches, creating a net shrinkage of five for the month. Only two of the past eight months have seen a net increase of listed products, and the current count of 1,439 (1,232 ETFs and 207 ETNs) is 51 fewer than the record intra-month high of 1,490 established on August 15, 2012.

(click to enlarge)New offerings were all income oriented and included ETFs targeting high yield equities, a money market replacement, Treasury-hedged high yield bonds, target maturity municipal bonds, and an MLP ETN. Closure activity included the withdrawal of Guggenheim from the leveraged and inverse ETF space.

Assets grew 3.0% in March to $1.47 trillion. The number of ETFs with asset levels above $10 billion increased by one to 30. Together,

Investors and traders holding shares of the BNP Paribas S&P Dynamic Roll Global Commodities ETF (BNPC) have until April 12 to dispose of their shares under free-market conditions. BNP Paribas Quantitative Strategies has voluntarily chosen to withdraw the NYSE Arca listing for the fund. No liquidation plans were announced, so it is imperative for all shareholders to sell prior to the delisting.

I predicted a short life for this ETF when it launched just 10 months ago, stating that it "brings nothing new to the market (except an unfamiliar name), and will likely struggle to attract investor attention." BNP Paribas has only this one ETF, so its demise also marks the firm's exit from the U.S. ETF market. The fund currently has about $20 million in assets.

The press release does not give any indication that BNPC plans to liquidate its holdings. In fact, it implies

Global X SuperDividend U.S. ETF (DIV), launched 3/12/13, intends to track an index of 50 equally weighted common stocks, MLPs, and REITs that rank among the highest dividend yielding equity securities in the United States. The underlying INDXX SuperDividend U.S. Low Volatility Index also restricts holdings to those that have paid dividends consistently over the last two years and have lower relative volatility than the market. However, the fund literature defines “lower volatility” as a beta of less than 0.85 using the S&P 500 as the benchmark.

Sectors have a 25% cap, and the current industry breakdown includes REITs 24.0%, Utilities 24.0%, MLPs 18.0%, Telecommunications 12.0%, and Consumer Staples 8.0%. I could not locate any yield data, but the fund will make monthly distributions and have an expense ratio of 0.45%. Additional information is located in the DIV overview, fact sheet (pdf), investment case (pdf), and prospectus

Deutsche Bank (DB) announced it will temporarily suspend creations of 26 exchange-traded notes (“ETNs”) after the close of trading on March 29, 2013 (sic). DB apparently forgot March 29 is a market holiday, so the last day of “non-broken” status for these ETNs will actually be March 28. The suspension affects 24 PowerShares DB ETNs and two ETNs marketed under the ELEMENTS brand. This action brings the number of active listings with “broken product” status to 39.

The creation/redemption mechanism is the heart and soul of exchange traded products (“ETPs”). It is what sets ETFs and ETNs apart from all other investment vehicles. When that mechanism is not functioning properly, it destroys the ability of market makers and authorized participants to take advantage of arbitrage opportunities and keep the trading price close to the underlying net asset value (“NAV”). The ETFs and ETNs become broken products. In extreme

On March 13, 2013, Fidelity Investments and BlackRock, Inc. (BLK) announced changes to their long-term strategic alliance . This includes expanding the quantity of no-commission iShares ETFs from 30 to 65, achieved by adding 45 ETFs to the list and removing 10. Fidelity’s lone ETF offering, Fidelity Nasdaq Composite Index Tracking Stock Fund (ONEQ), remains part of the list, raising the total count to 66 no-commission ETFs available to users of Fidelity’s online trading platforms.

Key points of the strategic alliance include:

• 45 iShares ETFs added to the no-commission lineup effective March 13.
• All 10 iShares Core ETFs are now commission-free at Fidelity.
• 10 iShares ETFs will be removed from the commission-free program effective April 30 (see list below).
• Effective July 31, any eligible iShares ETFs purchased commission-free must be held for a minimum of 30 calendar days (60 days for RIAs) or a short-term trading fee of

Guggenheim recently announced the closure of nine ETFs. The last day of trading will be this Friday, March 15. Liquidation values will be determined on March 21 and will reflect expenses encountered in the closing of the ETFs. It is therefore imperative that shareholders follow the "Five Steps to Avoid Disaster When Your ETF Closes" and sell your holdings by March 15.

The liquidating funds are:

1. Guggenheim 2x S&P 500 (RSU)
2. Guggenheim Inverse 2x S&P 500 (RSW)
3. Guggenheim ABC High Dividend (ABCS)
4. Guggenheim Airline (FAA)
5. Guggenheim MSCI EAFE Equal Weight (EWEF)
6. Guggenheim S&P MidCap 400 Equal Weight (EWMD)
7. Guggenheim S&P SmallCap 600 Equal Weight (EWSM)
8. Wilshire 4500 Completion (WXSP)
9. Wilshire 5000 Total Market (WFVK)

The closure of Guggenheim 2x S&P 500 and Guggenheim Inverse 2x S&P 500 marks the exit of Guggenheim (and the former Rydex ETF lineup) from the leveraged and inverse ETF business. Guggenheim is now

With more than 1,400 ETFs listed for trading in the U.S., there are bound to be a few you never heard of. There is a good chance Pax MSCI North America ESG Index ETF (NASI) fits that description. Launched in May 2010, NASI was the first ETF of the ESG Shares lineup from Pax World. Last month, Pax announced the last day of trading for NASI will be March 13. It has been a consistent member of ETF Deathwatch since December 2010, when it first became eligible.

Pax World states, "the proportionate interests of the shareholders in the net assets of the fund will be fixed on the basis of their respective share holdings at the close of business on March 13, 2013." In other words, any remaining shareholders who elect to go through the liquidation process should not have to bear any of the expenses of the

The number of ETF Deathwatch constituents dropped by 29 for March, the best monthly improvement in the history of the index. The list now contains 342 names (245 ETFs and 97 ETNs). The previous record decline was 24, established in September 2009, when the list shrank from 142 to 118. On a percentage basis, the previous record remains the more impressive of the two, reducing the count by 16.9% versus this month’s 7.8% reduction.

Nine new names joined the list as 38 came off. There are not many surprises in the new additions, with the possible exception of PowerShares Dynamic Semiconductor (PSI). This was once a popular and heavily traded fund, but newer products like the iShares PHLX SOX Semiconductor (SOXX), based on a more popular index, seem to have made inroads the past couple of years.

For the 25 products escaping the list due to improved health, four

A dozen new ETFs came to market in February, pushing the new product count to 17 for 2013. However, closures have been running at a faster pace, with 14 occurring in February and 18 year-to-date. At the end of February, the number of exchange traded product listings stood at 1,444 (1,238 ETFs and 206 ETNs).

Actively managed ETFs are included as a subset in the above ETF count, and now total 57. The group had above-average activity this month with three new actively managed ETF launches and two closures. Theoretically, there is no such thing as an actively managed ETN since ETNs are debt instruments that track an index and do not truly own anything to be managed. However, I won’t be surprised if some sponsor tries to issue an "actively managed" ETN tracking something other than an index.

Assets barely budged in February, growing only 0.1% to $1.42 trillion.

Today is the one-year anniversary of the launch of the PIMCO Total Return ETF (BOND). Its March 1, 2012, launch was the most highly anticipated and hyped ETF introduction in years, some would say ever. Today, BOND has $4.3 billion in assets, a one-year total return of 11.3%, and most analysts gushing over it every chance they get. In short, the PIMCO Total Return ETF has been a raging success in all areas except one - it failed its "Prime Directive" of being the ETF version of the PIMCO Total Return Bond Fund.

Actively managed ETFs have struggled to gain traction with investors. To overcome this hurdle, investors were sold on the concept that BOND would be the ETF version of the PIMCO Total Return Bond Fund (PTTRX), a traditional actively managed mutual fund with an excellent long-term track-record and a star manager - Bill Gross. PTTRX

Four new low volatility ETFs came to market this month, adding to a growing landscape of factor-based investment vehicles. Invesco PowerShares has first-mover status in the low volatility equity category with its May 2011 introduction of the PowerShares S&P 500 Low Volatility Portfolio (SPLV). The firm expanded that line-up in recent weeks with mid cap and small cap offerings that also follow S&P indexes. State Street SPDRs brought out its first two ETFs targeting low volatility stocks with last week's introduction of large cap and small cap funds based on Russell indexes.

PowerShares S&P MidCap Low Volatility Portfolio (XMLV) was launched on 2/15/13 with a 0.25% expense ratio. It will track an index composed of 80 of the 400 medium-capitalization securities from the S&P MidCap 400 Index with the lowest realized volatility over the past 12 months. S&P weights constituents by the inverse of each security's volatility with

Credit Suisse decided to delist three ETNs on April 3, 2009. That in itself is not strange, but Credit Suisse also made the decision to not liquidate these ETNs. This move, or lack of a move, apparently allowed Credit Suisse to avoid having to return the money to the note-holders, thereby allowing it to continue collecting fees on the ETNs. Earlier this month, Credit Suisse finally announced the repurchase of those ETNs, along with a fourth one that will be delisted prior to Tuesday's (February 26, 2013) trading.

I cannot think of any reasonable excuse for a firm taking 1,422 calendar days to liquidate a product and return the proceeds to the rightful owners, but that appears to be what Credit Suisse has done. This is one reason I always recommend shareholders to sell before the delisting and avoid the termination process. The only good news is