Guggenheim Funds, the Lisle, Ill.-based money management firm, is closing eight of its exchange-traded funds on March 23 that haven’t generated big demand, lifting the number of U.S.-listed ETFs shut this year to 16, or more than half the number closed in all of 2011.
The closings of the ETFs are part of an effort “to focus resources on products that have demonstrated the most marketplace demand,” Guggenheim said in a press release. The company, which acquired Claymore in 2009 and Rydex in 2010, is also about to rebrand its Rydex funds with the Guggenheim name. It did the same with Claymore in 2010.
The eight funds that will close in March together have gathered $105 million, or less than 1 percent of Guggenheim’s total $11.9 billion in ETF assets. The firm is the No. 8 U.S. ETF firm by assets. The last time it shut any funds was in 2010, when it closed a total of 16 funds, according to IndexUniverse’s ETF Watch.
That year, it shut a dozen leveraged and inverse equity strategies from the Rydex-side of its business and four from the Claymore side. One other fund, now called the Guggenheim Shipping ETF (NYSEArca: SEA), was shut then reopened in 2010 in an ETF-industry-first related to a shareholder vote connected to Guggenheim’s acquisition of Claymore.
The fact that ETF closures appear to be on pace to exceed those in 2011 in consistent with comments from ETF industry sources. Between 2000 and 2007, 10 ETFs were shut, while in the next three years, over 150 were closed, McKinsey & Company said in a paper in September, arguing this was a sign of growing competition.
The current funds being liquidated and their assets under management according to data compiled by IndexUniverse are:
- CurrencyShares Russian Ruble Trust (NYSEArca: FXRU), with $5.1 million in AUM.
- CurrencyShares Mexican Peso Trust (NYSEArca: FXM), with $39 million in AUM.
- Guggenheim EW Euro-Pacific LDRs ETF (NYSEArca: EEN), with $2.6 million in AUM.
- Guggenheim International Small Cap LDRs ETF (NYSEArca: XGC) with $5.6 million in AUM.
- Guggenheim Ocean Tomo Growth Index ETF (NYSEArca: OTR) with $14.8 million in AUM.
- Guggenheim Ocean Tomo Patent ETF (NYSEArca: OTP), with $24.2 million in AUM.
- Guggenheim Sector Rotation ETF (NYSEArca: XRO), with $12.8 million in AUM.
- Rydex MSCI All Country World Equal Weight ETF (NYSEArca: EWAC), with $3.7 million in AUM.
Shareholders in the affected Guggenheim ETFs who don’t redeem their shares by March 23, will have their shares redeemed automatically on March 30, and will receive a cash distribution in an amount equal to the net asset value of their fund shares as of the close of the day. The Guggenheim funds being shut are Claymore-legacy funds.
Shareholders in the two CurrencyShares ETFs may tender their shares through the Depository Trust Company to the Bank of New York Mellon through June 25, the company said in the press release. However, after that date, shareholders will have to wait until June 29, 2012 for final distributions.
The CurrencyShares ETFs have operated as part of the Rydex side of Guggenheim’s ETF business.
Investors are piling into a closed-end fund with a convenient ticker on the way to ruin.
Why currency-hedged Japan ETFs are about to get big cap gains distributions.
The biggest hurdles ETF advisors face aren’t financial, they’re emotional.
Here’s how exchange-traded funds trade and what kind of orders are used.