The “official” number of exchange-traded products on Deathwatch dropped for the second month in a row. This month’s list contains 111 names, seven fewer than last month.

E-TRACS CMCI Short Platinum Excess Return (PTD) heads the list again this month. PTD saw action on only three days in September, with a total of 500 shares traded for the entire month. The other 18 days were all zero volume days. The last trade took place back on September 17. Many ETF investors have never heard of E-TRACS, which may be why 90% of their product line is on ETF Deathwatch this, and every, month.

Last month I noted that the ISM Manufacturing index indicated that the manufacturing sector was still contracting, albeit at a slower pace. The latest data from the month of April show the same phenomenon. Likely, the index has already hit bottom.

Here’s what the Institute for Supply Management says in its release:

The number of exchange-traded products on Deathwatch surged to 153 this month, not including the 17 closures already announced for February. The current list consists of 120 ETFs and 33 ETNs that are at least six months old and failed to have an Average Daily Value Traded (ADVT) of at least $100,000 during the month of January.

The number of ETFs on Deathwatch continues to grow as we enter 2009. My current list contains 139 names: 97 ETFs and 42 ETNs. The list includes any ETF/ETN that is at least six months old and had an Average Daily Value Traded of less than $100,000 in December.

Exchange Trade Notes are suffering from concerns of default risk. The Lehman Brothers (LEHMQ.PK) bankruptcy, which resulted in the demise of three ETNs, is causing investors to hesitate before throwing money into these products. Unless ETN sponsors to take steps to calm investor fears, their representation on the list is likely to grow in the coming months.

Yesterday, the Commerce Department reported the third quarter current account deficit was $174.1 billion. This was caused largely by a $214.7 billion deficit on trade in goods.

The current account is the broadest measure of the U.S. trade balance. In addition to trade in goods and services, it includes income received from U.S. investments abroad less payments to foreigners on their investments in the United States

An article in this weekend's Wall Street Journal about ETFs with dwindling market caps caught our attention.  More and more ETFs seem to be trading hardly any volume these days, and many have already liquidated or announced plans to liquidate in the future.  As Wall Street usually does with everything, it seems to have gone overboard with ETFs, creating too many too fast.  Eventually only the biggest and strongest will survive.

We looked at more than 700 US ETFs and ETNs to see which ones are struggling the most with low market caps and volume.  The average market cap of all ETFs we looked at was about $816 million, but 131 (about 18%) have market caps lower than $10 million.  The market cap of the largest ETF, SPY, is also greater than the sum of the market caps of the smallest 596 (84%) ETFs.  Talk about income inequality!  The article notes that anything less than $50 million "probably loses money for the firm that sponsors it." 

By Jim Wiandt

Claymore Securities has launched another three ETFs, bringing its total ETF line-up to 35 funds.

The new ETFs cover three sector indexes from Morningstar ...  or should I say, super sectors. Rather than dividing the market into ten industry-focused "sectors," as most classification systems do, Morningstar splits the market into just three buckets: Service, Manufacturing and Information. 

The Claymore/Morningstar Information Super Sector Index ETF (MZN)
This ETF tracks the Morningstar Information Super sector Index that is designed to identify and follow companies that support and facilitate the exchange of ideas and information as a basis for commerce. Examples of these industries include software, hardware, media and telecommunication sectors.

The Claymore/Morningstar Services Super Sector Index ETF (MZO)
MZO tracks the Morningstar Services Super Sector Index that is designed to identify and follow companies whose main source of revenue comes from providing services. Eligible companies for this index include the health care services, consumer services, business services and financial services sectors.

Claymore/Morningstar Manufacturing Super Sector Index ETF (MZG)
This ETF tracks the Morningstar Manufacturing Super Sector Index that is designed to identify and follow companies in "smokestack" industries that process raw materials into physical goods that are sold into industrial and consumer markets. Companies that could be included in this index include consumer goods, industrial materials, energy and utility sectors.

Claymore Super Sector ETFs
Claymore/Morningstar Information Super Sector Index ETF (MZN)
Claymore/Morningstar Services Super Sector Index ETF (MZO)
Claymore/Morningstar Manufacturing Super Sector Index ETF (MZG)