The Zombie ETFs Among Us

Ron Rowland
October 5, 2012

NEW YORK (TheStreet) -- October is a time for costumes, and Zombie costumes are a perennial favorite with healthy humans dressing up as the fictional walking dead.
In the ETF world, there are actual Zombies. Many of them dress up in a fancy Web site costumes with an NYSE-listing mask in an attempt to make them appear healthy, living beings.
The sad fact is that more than a fourth of all listed exchange-traded products are probably nonprofitable entities for their sponsors. This month's ETF Deathwatch, available on Invest With An Edge contains 394 names (293 ETFs and 101 ETNs) out of the 1,456 products listed for trading.
Some are so dead they can't even justify a Zombie label because Zombies at least move. iPath Long Enhanced MSCI EAFE ETN MFLA hasn't traded since Jan. 18 (260 days ago but who's counting) and is quoted Thursday with a bid/ask of $67.73/$161.01. This product is beyond dead. The NYSE should be embarrassed to allow such a listing to exist.

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I'm often told my list is not realistic because many of the named sponsors have never closed a fund. Guess what? Thirty-four different issuers have closed U.S.-listed ETPs. All 34 of them could claim "they never closed an ETF" on the day before their first closure. There is a first time for everything.
Sixteen new names joined ETF Deathwatch for October. Twenty-five products that were on the list last month are no longer there. Seven of those came off due to increases in assets, trading activity, or both. The remaining 18 came off because they actually closed.
The 16 ETPs added to ETF Deathwatch for October:

  1. AdvisorShares Madrona Domestic ETF FWDD
  2. Elements Morningstar Wide Moat Focus ETN WMW
  3. First Trust Mega Cap AlphaDEX Fund FMK
  4. First Trust Nasdaq ABA Community Bank QABA
  5. First Trust United Kingdom AlphaDEX FKU
  6. Global X China Financials ETF CHIX
  7. Guggenheim MSCI Emerging Markets Equal Weight EWEM
  8. iPath DJ-UBS Tin ETN JJT
  9. iPath GEMS Asia 8 ETN AYT
  10. iShares MSCI Emerging Markets Growth EGRW
  11. Market Vectors China A-Shares ETF PEK
  12. Market Vectors Indonesia Small-Cap ETF IDXJ
  13. PowerShares S&P SmallCap Industrials PSCI
  14. ProShares Short Oil & Gas DDG
  15. Russell Small Cap High Dividend Yield ETF DIVS
  16. Teucrium Agricultural Fund TAGS


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The seven names removed from ETF Deathwatch due to improved health:

  1. ETRACS Wells Fargo BDC ETN BDCS
  2. iShares MSCI Global Select Metals & Mining Producers PICK
  3. iShares S&P Global Clean Energy ICLN
  4. Market Vectors CEF Municipal Income ETF XMPT
  5. PowerShares DB Agriculture Long ETN AGF
  6. PowerShares KBW Premium Yield Equity REIT KBWY
  7. Teucrium Soybean Fund SOYB


The 18 ETPs removed from ETF Deathwatch due to delisting and closure:

  1. Direxion Daily Agribusiness Bull 3x (COWL)
  2. Direxion Daily Agribusiness Bear 3x (COWS)
  3. Direxion Daily Basic Materials Bear 3x (MATS)
  4. Direxion Daily BRIC Bull 3x (BRIL)
  5. Direxion Daily BRIC Bear 3x (BRIS)
  6. Direxion Daily Healthcare Bear 3x (SICK)
  7. Direxion Daily India Bear 3x (INDZ)
  8. Direxion Daily Retail Bear 3x (RETS)
  9. ETRACS 1-Month S&P 500 VIX Futures ETN (VXAA)
  10. ETRACS 2-Month S&P 500 VIX Futures ETN (VXBB)
  11. ETRACS 3-Month S&P 500 VIX Futures ETN (VXCC)
  12. ETRACS 4-Month S&P 500 VIX Futures ETN (VXDD)
  13. ETRACS 5-Month S&P 500 VIX Futures ETN (VXEE)
  14. ETRACS 6-Month S&P 500 VIX Futures ETN (VXFF)
  15. ETRACS Daily Short 4-Month S&P VIX Futures ETN (DDVX)
  16. ETRACS Daily Short 5-Month S&P VIX Futures ETN (EEVX)
  17. ETRACS Daily Short 6-Month S&P VIX Futures ETN (FFVX)
  18. iPath Short Ext -3x Russell 1000 TR ETN (ROSA)

Additional Resources

ETF Deathwatch Criteria on Invest With an Edge (objective criteria used to generate list) ETF Deathwatch Archives on Invest With An Edge (past monthly issues)
At the time of publication, the author was long XMPT.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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