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PowerShares ETF Liquidations Add to Record Year for Closures


Invesco PowerShares is the latest ETF provider to announce it’s shutting down products that have failed to gain traction in an increasingly competitive industry.

The Chicago-based firm this week said it plans to close 13 ETFs that combined represent less than 1% of Invesco PowerShares’ total assets.

A record number of exchange traded products have shut their doors this year as the business matures and consolidates. [Three Direxion ETFs to Close]

In the U.S. market, 175 new ETFs have launched year to date, while 99 were delisted, according to XTF. [Why ETF Closures are a Good Thing for Investors]

According to independent research firm ETFGI, in the global ETF market, 438 new ETFs have been launched by 89 providers on 28 exchanges, while 127 ETFs have delisted year to date through the end of November.

“ETFs are shutting down at a breakneck pace this year. Indeed, more exchange traded funds and exchange traded notes have liquidated this year than in any other year in the industry’s 19-year history,” Ignites.com reports.

Many of the closures in the U.S. market this year have resulted from Russell and FocusShares throwing in the towel on entire ETF lineups. [ETF Shutdowns Reveal Fierce Competition]

“You’ve got firms keeping these products on a shorter leash and the patience level is definitely lower on the part of product providers,” said Robert Goldsborough, ETF analyst at Morningstar, in the Ignites story. “Managers are probably thinking, ‘These products aren’t taking off and they’re not going to take off, and if they’re not going to come to fruition, why are we throwing good money after bad?’”

He added: “The world has changed a little bit. I think it’s the sign of a maturing industry and I think it’s a sign that there are a lot of providers that aren’t willing any longer to prop up unsuccessful products.”

PowerShares said the 13 affected ETFs will liquidate in the first quarter of 2013.

“We regularly review our ETF portfolios, evaluating numerous factors such as investment results, length of time in the market and investor interest,” said Ben Fulton, Invesco PowerShares managing director of global ETFs, in a press release. “Based on this assessment, we believe the time is right to make these moves and refocus our resources to better meet investors’ needs.”

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.