There is no denying that the ETF industry has certainly come a long way since SPY’s debut in 1993. With over 1,500 products to choose from, the possibilities are essentially endless for investors, as the low-cost and efficient ETF wrapper allows investors to tap into nearly every corner of the investable universe [see Foreign ETFs: How Other Countries Stack Up].
But with ETF issuers pitching so many new products to investors, it is a virtual certainty that some of the offerings will strike out due to lack of interest, a poorly-devised distribution plan, or numerous other reasons. Below, we visit the ETF “graveyard,” and highlight 10 unique ETFs that didn’t quite make the cut.
This fund made its debut in 2011, becoming the third fund ever to offer targeted exposure to agribusiness. Considering the Farming ETF’s clever ticker –BARN–and the success of the Market Vectors Agribusiness ETF (MOO, A), it was a bit surprising to see this ETF close its doors. BARN was slightly pricier than its competitor, but it was available commission-free on E*TRADE and Interactive Brokers trading platforms.
Food ETF (EATX)
The Food ETF (EATX) launched in 2011, six years after the first food and beverage ETF (PBJ, B+) made its debut. Unlike the popular PBJ, EATX offered exposure to food and beverage companies both in and outside of the U.S. Before the fund closed, its top holdings included Nestle, Danone, and Brasil Foods. The fund was, however, 0.05% more expensive than PBJ, though it did trade commission free on two platforms [see ETF Hall of Shame: Nine Exchange-Traded Debacles].
Fishing Industry ETF (FISN)
Debuting in 2011, FISN became the only ETF offering pure play exposure to the commercial fishing and aquaculture industries. The fund held a portfolio of about 20 companies listed in eight different countries. Considering the narrow focus, small portfolio size, and the somewhat volatile nature of the fishing industry, it perhaps wasn’t too surprising to see this fund close not even a year after its launch.
Texas ETF (TXF)
In 2009, Geary Advisors became the first firm to offer state-specific ETFs, which included the Texas Exchange-Traded Fund (TXF). Not surprisingly, TXF maintained a tilt towards the oil and gas sector, and includes allocations to several large cap energy stocks. Roughly one year after its launch, however, the Texas ETF, along with the Oklahoma Exchange-Traded Fund (OOK), shut its doors. The story behind the shuttering of the ETFs, however, may be one of the most bizarre in the industry.
Waste Management ETF (WSTE)
Making its debut in 2011, the Waste Management ETF (WSTE) offered exposure to one of the most “recession-proof” corners of the market: environmental services and waste management. Though the investment thesis behind the fund was compelling–considering trash is always created and demand for waste removal is always prevalent–WSTE closed its doors less than a year after its debut.
PureFunds ISE Diamond/Gemstone ETF (GEMS)
This fund was a hybrid between a metals & mining ETF and a “luxury” ETF. Launched in 2012, GEMS offered exposure to the largest liquid companies involved in the gemstone industry, including companies that produce, explore and sell gemstones. Top holdings included Petra Diamonds, Harry Winston Diamond Corporation and Chow Tai Fook Jewellery Group. Though the fund was rather unique, it was shut down not long after its launch.
Contrarian ETF (CNTR)
Making its debut in 2011, the Contrarian ETF (CNTR) was one of the most unique product launches seen in the industry. Its investment thesis was simple, and one that investors have been using for years: “be greedy when others are fearful.” To accomplish its objective, the fund selected stocks that exhibited low price-to-sales multiples to their historical average, as well as those that have lagged the broad market recently. Unfortunately, the fund didn’t gain traction and was forced to close its doors in 2012 [see 7 Underappreciated Core ETFs].
Rockledge SectorSAM ETF (SSAM)
This actively-managed ETF aimed to provide investors a way to tap into the popular sector rotation strategy. SSAM utilized a quantitative analytical system designed to forecast excess returns to each sector of the U.S. economy over a specific time period. The fund, however, charged a steep 1.50% expense ratio, compared to its passively-managed competitor HUSE, which charges 0.95%. Due to poor performance and low investor interest, SSAM shut down in 2013.
ETRACS Next Generation Internet ETN (EIPO)
Debuting in 2011, EIPO was the first fund to offer targeted exposure to internet-related companies that had been publicly traded for less than three years. Its portfolio was comprised of 20 components, including RackSpace, LinkedIn, Pandora, Ancestry.com, and OpenTable. Though the fund appealed to some niche investors, it failed to attract significant inflows, forcing it to close in 2013. Its broader-based competitors IPO and FPX have both managed to stay afloat [see ETFs to Play 2014's Most Anticipated IPOs].
U.S. Market Neutral Beta Fund (BTAH)
This fund made its debut in 2011, along side a slew of “market neutral” products offered by QuantShares. BTAH was designed to capture the spread return between high beta and low beta stocks, allowing investors to make a bullish bet without the excessive risk of long-only exposure. Though the fund managed to outperform the broader market for the majority of its existence, BTAH closed its doors not long after the fund’s launch.
The Bottom Line
Though many of the ETFs on this list seemed like compelling options given their unique focus, lack of investor interest ultimately forced the funds to shut their doors. But with so many more products on the way, investors will have no problem finding other options.
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Disclosure: No positions at time of writing.