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." 

Just for kicks, I set up an ETF screen that used the following criteria for the current one and three month time frames. Of all the ETFs, seven made this list.

• Above average market return.
• Top 20% of net asset value within its category.
• Highest discount to net asset value
• Performance vs. benchmark (whatever it is) >10%

Here they are - with surprises:

A new exchange-traded fund [ETF] company debuted on Friday, as FocusShares LLC listed four new ETFs on the NYSE Arca platform. The new funds are all tied to indexes from the options-focused International Securities Exchange (ISE), and represent one way that exchange is looking to capitalize on its indexing research efforts.

The new funds are: