Javelin To Shut Down Contrarian ETF (JCO)

by on September 14, 2011 | ETFs Mentioned:

Javelin announced on Tuesday that the last day for trading in its JETS Contrarian Opportunities Index Fund (JCO) will be September 29, citing a failure to attract sufficient assets and investor interest as the cause for the termination of the company’s only ETF. “With many investors looking for new investing tools, we believe that contrarian and other investment styles will eventually be well represented in the ETF market,” said Javelin president and founder Brint Frith in a notice on the company’s Web site. “We look forward to building on our experience.”

Shareholders remaining in the fund as of September 29 will have their shares automatically redeemed on October 11, the last day of operations for JCO. The fund, which debuted in April 2010, recently had assets of about $5 million.

JCO sought to replicate the Dow Jones U.S. Contrarian Opportunities Index, a benchmark that was constructed to select stocks consistent with a contrarian investment strategy. The equal weighted index consisted of 125 U.S. stocks that had performed poorly recently but maintained strong underlying fundamentals. Despite a relatively strong performance record, JCO struggled to gain traction with investors [see Five ETF Ideas For Contrarian Investors].

About one year ago Javelin announced plans to shutter its Shariah Compliant ETF (JVS), which was linked to an index comprised of global stocks that met Islamic principles.

CNTR: The Other Contrarian ETF

Javelin’s decision comes shortly after Russell introduced its Contrarian ETF (CNTR), which consists of Russell 1000 components where opportunities exist for the stock price to improve as measured by a low historical price to sales multiple. The index to which CNTR is linked excludes companies that have outperformed their market and sector peers as measured by cumulative total return over the last three to five years [see more on CNTR's fact sheet].

CNTR has also struggled to gain assets since its launch in May; the ETF currently has about $4 million in AUM.

After almost no closures in the first half of 2011, a number of products have been shuttered in recent months. FaithShares recently pulled the plug on its suite of faith-based products, and multiple Barclays ETNs have shut down after hitting automatic redemption levels. Many within the ETF industry are expecting that a wave of consolidation will ultimately result in the closure of hundreds of products, noting that the top-heavy nature of the current product lineup–coupled with the traditionally low expenses in the space–means that many smaller funds are losing money [also read ETF Hall Of Shame: Nine Exchange Traded Debacles].

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Disclosure: No positions at time of writing.