Yesterday, February 9, was the last day of trading for the 17 NETS brand ETFs from Northern Trust. If you have not sold your shares by now, then you get to experience the liquidation process first hand. Northern Trust previously stated its intent to pay all remaining shareholders on February 20, the official liquidation date.

On January 27, Northern Trust Corporation bowed out of the ETF business, closing 17 funds and heightening the anxiety of many ETF investors who had watched a handful of other ETFs shut their doors in 2008. When the ETF Report profiled the Northern Exchange Traded Shares ((NETS)) funds after their debut in May, we raised this question: while “the differences (that make the funds unique) may be significant for the hedge funds and institutional traders that typically deploy sophisticated hedging strategies or trade in large blocks of shares, how important are they for individual investors?” The methodology of the NETS ETFs was apparently not different enough to keep the brand afloat or attract the critical mass of assets needed for survival. While the 17 ETFs shuttered by NETS may have looked good “on paper,” their eventual downfall underscores many of the realities of ETF investing, which, in a leaner, meaner marketplace, investors will have to come to terms with quickly.

The Chicago-based trust bank launched its first 14 ETFs in May of 2008, entering the already crowded field of international ETF choices. Aside from one sector fund, the NETS Tokyo Stock Exchange REIT ETF (JRE), and one global index fund, the NETS FTSE CNBC Global 300 Index Fund (MYG), the NETS ETFs were aimed at regional stock exchanges in individual countries. While iShares’ line of country- specific ETFs is based on slices of the larger MSCI Index, NETS ETFs projected that the use of local indexes would add both arbitrage and liquidity opportunities for traders.

The number of ETF closures for 2008 was a record high 58. In all likelihood, that record will be shattered in 2009. On Tuesday, Northern Trust announced their plan to exit the ETF business and shut down all 17 of their NETS exchanged traded funds.

The last day of trading for the affected products will be February 9, 2009. Shareholders are encouraged to sell shares before then to avoid going through the liquidation process. These are thinly traded ETFs, so be sure to use a limit order when placing your trades.

On Tuesday, Northern Trust (NTRS) shocked the ETF world by announcing it was closing all 17 of its Exchange Traded Funds, effective February 10 before the open. Shares held past that date would be liquidated for their NAVs on February 20.

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.

The IMF unleashed a heat-seeking missile on global markets with statements that "The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s,” and “The situation is exceptionally uncertain and subject to considerable downside risks.”

This opinion was tempered somewhat by the IMF chief economist’s optimism that the world would avoid a repeat of the Great Depression of the 1930s,  based on an expectation that governments would follow the right policies. European governments were having difficulty in coordinating their response to the crisis and more action was needed to shore up their shaky financial systems, he said.

Temasek, Singapore's second-largest sovereign wealth fund, [SWF] is certainly doing far better than Singapore exchange-traded funds such as the iShares MSCI Singapore (EWS) that is down almost 17% year-to-date.

The lesson is that it pays to play as a big boy with lots of cash and negotiating leverage.

In my Forbes Asia column entitled "Malaysiapore" earlier this year, I likened the Malaysia and Singapore stock markets and exchange-traded funds that track them (see below) to two purring turbine engines, working smoothly in tandem to deliver superior performance. But for the last few months, the Malaysian and Singapore stock markets have run into major turbulence.

The problem is a drop in economic growth.

By Heather Bell

WisdomTree Launches Currency ETFs

On May 14, WisdomTree (WSDT.PK) rolled out the first four currency exchange-traded funds resulting from its co-branding relationship with The Dreyfus Corporation.

By Heather Bell

On Monday, Northern Trust launched another three of its NETS (Northern Trust Exchange-Traded Shares) products, bringing its total lineup to nine exchange-traded funds. The newest funds are the:

Australia ETFs
iShares MSCI Australia Index Fund (EWA)
NETS S&P/ASX 200 Index Fund (AUS)