ETF Watch: PIMCO, Oppenheimer Announce Closures

February 17, 2017

OppenheimerFunds and PIMCO have announced that they will be shutting down a combined total of four funds in March. ETF closures have been trailing 2016 so far this year. Last year, March was a big month for closures, with a total of 17 funds shutting down; with only four set to occur in March this far into February, it looks like there may be a significant dropoff.

PIMCO

PIMCO has announced that it will be shutting down two of its actively managed ETFs, both of which have substantial assets. The PIMCO Diversified Income Active ETF (DI) and the PIMCO Global Advantage Inflation-Linked Bond Active ETF (ILB) will both see their last day of trading on March 31. The funds have $43 million and $80 million in assets under management, respectively.

A source at PIMCO says that the firm simply did not see “sufficient growth potential” in the two funds.  

Although those asset amounts are fairly substantial for index-based ETFs, they are not necessarily up to snuff for actively managed funds.

“I think the asset management bar for managing an active ETF is higher than it is for a passive product because of the personnel needed. These two ETFs are not cheap in a period where fees matter more to investors as rates are likely to move higher. And the trading volume is quite low, both contributing to wide bid/ask spreads,” said Todd Rosenbluth, director of ETF & mutual fund research at CFRA.

Indeed, ILB comes with an expense ratio of 0.79%, while DI charges 0.86%.

PIMCO has recently filed for “dynamic” multifactor ETFs that will adjust their factor exposures in response to changes in market conditions.

OppenheimerFunds

OppenheimerFunds is set to close two of the revenue-weighted ETFs it acquired with its purchase of RevenueShares. The Oppenheimer Global Growth Revenue ETF (RGRO) and the Oppenheimer ADR Revenue ETF (RTR) will see their last days of trading on March 9; neither fund had acquired much in the way of assets, less than $3 million for RGRO and less than $14 million for RTR.

Contact Heather Bell at [email protected].

 

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