FocusShares, the ETF unit of brokerage firm Scottrade, will be liquidating its entire roster of 15 ETFs at the end of August due to the funds’ failure to attract enough assets.
The funds, which include broad U.S. stock market as well as sector strategies linked to Morningstar benchmarks, have combined net assets of some $100 million. They will last trade on Aug. 17, and will close to new investment on Aug. 20.
Citing a board of directors’ decision to liquidate the funds that took into consideration current market conditions, lack of investor interest and asset growth prospects, Scottrade declined to comment any further other than to say the company is now “evaluating its products and services” as it moves forward, a representative told IndexUniverse.
The move comes just a few short months after FocusShares launched an aggressive marketing campaign designed to bring investor attention to its low-cost funds. At that time, the company hoped to bring to the limelight the fact that some of its ETFs were the cheapest on the market and that Scottrade clients could trade them commission free.
FocusShares' failed attempt to gain traction raises the question of just how much land-grab opportunities remain in an ETF market that is dominated by a handful of providers. At last check, some 10 percent of ETF providers—names like iShares, State Street Global Advisors and Vanguard—controlled more than 90 percent of total U.S.-listed ETF assets.
Scottrade acquired FocusShares in 2010, some two years after FocusShares had shuttered a number of niche ETFs in the wake of the 2008 market crash. The company rolled out its roster of funds back in March 2011.
Investors will have until Aug. 17 to sell their holdings while incurring any transaction fees that come from their broker-dealer, the company said in a press release. Between Aug. 20-30, shares may also be sold, but there’s no guarantee there will be a market for them, it added.
By Aug. 30, any investor still holding on to the ETFs will get a cash distribution equal to the amount of the net asset value of their shares at that date, including any capital gains and dividends. There will be no fees tied to that.
The ETFs being liquidated include:
- Focus Morningstar US Market Index ETF (FMU)
- Focus Morningstar Large Cap Index ETF (FLG)
- Focus Morningstar Mid Cap Index ETF (FMM)
- Focus Morningstar Small Cap Index ETF (FOS)
- Focus Morningstar Basic Materials Index ETF (FBM)
- Focus Morningstar Communication Services Index ETF (FCQ)
- Focus Morningstar Consumer Cyclical Index ETF (FCL)
- Focus Morningstar Consumer Defensive Index ETF (FCD)
- Focus Morningstar Energy Index ETF (FEG)
- Focus Morningstar Financial Services Index ETF (FFL)
- Focus Morningstar Health Care Index ETF (FHC)
- Focus Morningstar Industrials Index ETF (FIL)
- Focus Morningstar Real Estate Index ETF (FRL)
- Focus Morningstar Technology Index ETF (FTQ)
- Focus Morningstar Utilities Index ETF (FUI)
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