The exchange traded fund industry is always coming out with innovative investment strategies, but some of the ideas just don’t stick. FFCM LLC, the investment team behind the QuantShares suite, will be liquidating three of its ETF products, but the provider is also planning on bolstering its product line.
According to a press release, three funds will close on Nov. 2, 2012 and will be fully liquidated by Nov. 19 due to lower-than-expected institutional and retail demand:
- QuantShares U.S. Market Neutral High Beta Fund (BTAHF)
- QuantShares U.S. Market Neutral Anti-Momentum Fund (NOMO)
- QuantShares U.S. Market Neutral Quality Fund (QLT)
Shareholders of BTAH, NOMO and QLT may begin selling their holdings until Nov. 2. Investors who are still holding the funds upon the close date will receive cash equal to the net asset value of the fund shares.
Investors should be aware that in the last days of the ETF, sellers will be scrambling to dump their positions, which can lead to hefty losses. Due to the disparate number of sellers to buyers, the bid/ask spread tend to widen. Potential sellers should try to set up limit orders to sell at a given price so that one won’t get caught unawares. [My ETF is Shutting Down — Now What?]
Despite the set back, FFCM still wants to expand its line, filing for six additional funds to accommodate current investor demand:
- QuantShares U.S. High Quality Fund
- QuantShares U.S. High Dividend Absolute Return Fund
- QuantShares U.S. High Momentum Fund
- QuantShares U.S. Low Beta Absolute Return Fund
- QuantShares U.S. Low Beta Fund
- QuantShares U.S. Relative Value Fund
QuantShares offers passively managed Funds. However, the funds are part of the new line of factors-based, or “intelligent,” index funds that mimic actively managed styles.
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.