The ETF industry’s biggest ETF issuer doesn’t often shut down ETFs, but when it does, BlackRock’s iShares arm tends to do it in the summertime.
iShares announced today that it will be closing 16 ETFs, almost all of them falling under the smart-beta rubric. The funds’ last day of trading will be Aug. 15.
Of the nonsmart-beta ETFs that are shuttering, the iShares Currency Hedged MSCI Europe Small-Cap ETF (HEUS) launched in 2015, and only has about $3 million in assets under management (AUM), while the iShares Currency Hedged MSCI ACWI ETF (HACW), which launched around the same time, has $6 million. The iShares Currency Hedged International High Yield Bond ETF (HHYX), another 2015 launch, has less than $2 million in AUM.
iShares joins other asset managers that have closed currency hedged equity ETFs that were the rage in 2015 after failing to gather assets. Back then it seemed as if the currency hedged train would be unstoppable as HEDJ, DXJ, DBEF and others topped the leader board. But when the dollar reverses, it’s harder to meet minimum thresholds to remain viable," said Todd Rosenbluth, director of ETF and mutual fund research at CFRA.
The other remaining funds to be closed are factor-focused products and include four currency-hedged minimum-volatility ETFs as well as nine multifactor sector funds. The four hedged min-vol funds all rolled out in the last quarter of 2015, and none have more than $20 million in AUM. They include:
- iShares Edge MSCI Min Vol Global Currency Hedged ETF (HACV)
- iShares Edge MSCI Min Vol EM Currency Hedged ETF (HEMV)
- iShares Edge MSCI Min Vol EAFE Currency Hedged ETF (HEFV)
- iShares Edge MSCI Min Vol Europe Currency Hedged ETF (HEUV)
Meanwhile, the nine multifactor sector ETFs are as follows:
- iShares Edge MSCI Multifactor Utilities ETF (UTLF)
- iShares Edge MSCI Multifactor Energy ETF (ERGF)
- iShares Edge MSCI Multifactor Consumer Staples ETF (CNSF)
- iShares Edge MSCI Multifactor Healthcare ETF (HCRF)
- iShares Edge MSCI Multifactor Financials ETF (FNCF)
- iShares Edge MSCI Multifactor Technology ETF (TCHF)
- iShares Edge MSCI Multifactor Industrials ETF (INDF)
- iShares Edge MSCI Multifactor Consumer Discretionary ETF (CNDF)
- iShares Edge MSCI Multifactor Materials ETF (MATF)
The entire family has roughly $50 million in AUM. The products were launched in 2016 after John Hancock rolled out its own family of multifactor sector funds based on indexes created by Dimensional Fund Advisors. Those funds currently have about $365 million in AUM after a slow start.
"iShares had already moved on from multi factor sector products when they launched the active iShares Evolved suite, including the iShares Evolved US Consumer Staples ETF (IECS). Investors have focused on market-cap-weighted and to a lesser extent on equal-weighted sector ETFs, but anything else more complicated to explain has struggled to garner interest," Rosenbluth noted with regard to the scheduled closures.
The total number of closures so far for 2018 far outpaces the record-breaking amount of shutdowns that occurred in 2017; that’s mainly because of the 50 iPath ETNs that were shuttered earlier this year. Factor out those closures, and numbers are comparable with 2017. This latest announcement just adds more weight to the idea that 2018 will demolish 2017’s record.
Contact Heather Bell at [email protected]