By Ansh Chaudhary
The ETF Deathwatch decreased in size in August compared to July. Twenty-six exchange-traded products ("ETPs") were added to the list, and 40 funds were removed, making August a busier month in terms of removals. Of those that were removed, 13 were due to increased health and 27 were due to asset managers closing their funds. The high number of additions to the Deathwatch in August was expected, considering the strong performance of the major U.S. indexes for the month.
The funds added to the list in August were a mix of products, including global funds, actively managed funds, hedged/leveraged funds, and niche funds. One was added because it had low assets under management ("AUM") for three consecutive months. The rest were added because they had a low average daily volume for the past three months. These additions may have enough AUM and volume to keep them from closure; however, our system takes into account both AUM and volume, so it's likely that should volume and interest remain low, these funds may be considered for closure.
The low volume in these funds could be due to the nature of their investment product. Many funds on the Deathwatch list are niche products, which makes sense given the current market environment. The Technology sector continued its momentum in August, and the NASDAQ 100 gained almost 10%. Investors remain confident in the overall markets. Along with the momentum in equities, bond yields remain low, as the Federal Reserve has been patient about raising interest rates. Federal Reserve Chairman Jerome Powell mentioned that the Fed is not concerned about surpassing the 2% inflation target, leaving the Fed more room to conduct monetary policy. Given the momentum in the equity markets combined with low interest rates, it makes sense that there are a lot of treasury, bond, and hedged funds added to the Deathwatch list. Also, investors and fund managers
