The ETF industry has been experiencing exponential growth over the past few years, as we are now able to choose from more than 1,400 products with well over $1 trillion in combined assets. But as with any budding industry, there comes a time when it is necessary to trim the fat so to speak, and upkeep the quality of options available. As a result, the past few months have seen a fair amount of funds close that simply failed to attract investor attention [see also Doomsday Special: 7 Hard Asset Investments You Can Hold in Your Hand].
While no issuer enjoys shuttering a fund, it is simply a growing pain associated with such a young industry. As the number of ETFs available continues to skyrocket, so too will the number of funds that are no longer useful or popular among the investing world. When most investors hear that their ETF position is soon to close, they are struck with panic and contemplate selling out immediately. An ETF closing is not necessarily a bad thing, just more of a hassle. When a fund closes, investors are given their money back; however, selling prematurely can sometimes lead to bigger losses than simply holding on to the fund until liquidation [see also How To Survive An ETF Liquidation].
ETFs closing their doors is a necessary evil. Nonetheless, it is an occurrence that will likely become more common as the industry continues its rapid expansion for years to come. After examining the current state of the industry, we have developed a list of 15 equity funds that may be in danger of closing. Our criteria for this list was limited to funds that were more than two years old, with AUM under $5 million, and a three month average daily trading volume below 2,000 shares. While it is by no means a guarantee that these funds will close down, they are certainly circling the drain as far as their lifespan is concerned. Below, we list the equity funds that may be in danger of being terminated by their respective issuers if they cannot attract more attention and inflows [see also The 10 Most Actively Traded ETFs In The World]:
|Ticker||ETF||Assets (In Millions)||Avg. Volume||Inception Date|
|RPX||Growth Equity Strategy Fund||$1.489||1,554||10/12/2009|
|EEH||SPECTRUM Lg Cap U.S. Sector ETN||$1.495||1,055||08/01/2007|
|SMK||UltraShort MSCI Mexico||$1.938||892||06/16/2009|
|JPX||UltraShort MSCI Pacific ex-Japan||$1.963||1085||06/16/2009|
|AXFN||MSCI ACWI ex US Financials Sector Index Fund||$2.189||553||01/20/2010|
|FEFN||MSCI Far East Financials Sector Index Fund||$2.434||217||01/20/2010|
|EEN||EW Euro-Pacific LDRs ETF||$2.714||1,024||03/01/2007|
|GWO||CS Global Warming ETN||$2.848||1,926||04/01/2008|
|GVT||Concentrated Large Cap Value Strategy Fund||$2.961||827||05/04/2009|
|FGEM||Financials GEMS ETF||$3.217||1,577||09/16/2009|
|KME||SPDR KBW Mortgage Finance ETF||$3.631||913||04/29/2009|
|PSTL||Global Steel Portfolio||$4.425||1,002||09/18/2008|
|QQQC||NASDAQ China Technology ETF||$4.740||1,937||12/08/2009|
|BXDB||Barclays Short B Leveraged Inverse S&P 500 TR ETN||$4.822||1,450||11/17/2009|
Disclosure: No positions at time of writing.