The ETF industry is growing rapidly with more than 1,40 products for a combined $1.4 trillion in assets. While the new products continue to find their way into the ETF world, closures are also hitting the market. In 2012, over 100 funds failed to attract investor interest and thus, closed their doors (read: PowerShares Expands Low Volatility ETF Line-ups).
Following the trend of closures, Guggenheim, the New York-based ETF issuer, recently announced that it would be shuttering nine funds, bringing its total offering down to 68. The nine ETFs are as follows:
ABC High Dividend ETF (ABCS)
MSCI EAFE Equal Weight ETF (EWEF)
S&P MidCap 400 Equal Weight ETF (EWMD)
S&P SmallCap 600 Equal Weight ETF (EWSM)
Airline ETF (FAA)
2x S&P 500 ETF (RSU)
Inverse 2x S&P 500 ETF (RSW)
Wilshire 5000 Total Market ETF (WFVK)
Wilshire 4500 Completion ETF (WXSP)
All these funds combine to have $148 million in assets and account for nearly 1% of the issuer’s total AUM. All were probably losing money, and none showed any indication drawing investor interest over the near term. So, Guggenheim felt that it would be best to close down these unpopular products in order to focus its energies elsewhere (read: Three Surging ETFs with Strong Momentum).
Some on the list, such as ABCS, EWMD, EWSM and WXSP had less than $10 million in assets each and were generating meager revenues for the firm. Still, some were relatively unique, the cheaper options in the space or solid performers. Even if these funds were not being taken advantage of for the time being, their closure implies a loss for investors in general.
While these continuous closures are discouraging, investors should note that there are other options in the space that offer similar exposure (see more ETFs in the Zacks ETF Center).
However, in the case of FAA, this marks the end of ETF exposure to the airlines as no other fund currently on the market focuses on this segment.
If you are currently an investor in any of the aforementioned products, please note that the shares will stop trading on NYSE Arca after the close of business on March 15, 2013. So, there is some time before the shut down. Investors who do not exit by March 21, will receive a cash payment equal to the NAV of their shares, inclusive of capital gains and dividends as of the liquidation date of March 22, 2013.
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