EC ETF Deathwatch For April 2016: 35 Names Added

A whopping 35 ETFs and ETNs joined ETF Deathwatch this month.  However, seven came off the list thanks to improved health, and another 11 exited due to their demise and liquidation. The net increase of 17 products pushes the count to an all-time high of 435.

Despite the 585 lifetime product closures, 25 of which have occurred this year, the quantity of funds in jeopardy of increasing the death toll continues to grow. The primary reason is that all of the major investment categories are covered. New products coming to market tend to target a narrow niche, or they add a small twist to an existing strategy in an effort to be unique. Most of the 35 products joining the list fit into one of these descriptions.

Even though the 331 ETFs on Deathwatch account for 76% of the 435 total, ETNs continue to have the highest representation. There are 204 ETNs listed for trading, and 104 are on Deathwatch. That is more than half. Ten years ago, when ETNs first arrived on the scene, they offered exposure to many market segments that ETFs were avoiding. However, ETF offerings continue to evolve and have been encroaching on territories that were once the domain of ETNs. Today, most successful ETNs target MLPs, VIX futures, leveraged commodity futures, leveraged dividend plays, or they are customized products for specific asset managers. There are only 33 ETNs with asset levels above $100 million.

Actively managed ETFs also have above-average representation with 39 of the 136 (28.7%) actively managed funds finding themselves on Deathwatch. The 145 smart-beta funds on this list equates to 24.4% of that group. Traditional capitalization-weighted index ETFs appear to have the best chance of survival with just 15.8% of them currently in jeopardy. Combined, the 331 ETFs in these three ETF segments says that one in every five (20%) ETFs is on Deathwatch.

The average asset level of products on ETF Deathwatch increased from $6.2 million to $6.6 million, and the quantity of products with less than $2 million inched higher from 97 to 98. The average age decreased from 46.6 to 46.4 months, and the number of products more than five years old increased from 138 to 148. The fact that sponsors have continued to subsidize 148 unprofitable funds for more than five years indicates they are either extremely patient or in denial.

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Disclosure: Author has no positions in any of the securities, companies, or ...

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