Direxion Shares, the No. 2 exchange-traded fund sponsor by assets of leveraged and inverse strategies, is closing three ETFs that have failed to attract significant assets, bringing a record year of ETF closures to the brink of crossing the 100-fund mark.
The three funds that the Newton, Mass.-based company is shutting and their assets are as follows:
- Direxion Large Cap Insider Sentiment Shares (NYSEArca: INSD), $4.13 million
- Direxion S&P 1500 RC Volatility Response Shares (NYSEArca: VSPR), $4.25 million
- Direxion S&P Latin America 40 RC Volatility Response Shares (NYSEArca: VLAT), $3.83 million
While total U.S.-listed ETF assets have been reaching record levels this year—most recently just shy of $1.338 trillion on Dec. 12—closures have been accelerating while fund launches have been slowing.
Industry sources say the industry is starting to mature and, moreover, the risk on/risk off flavor of markets since the 2008 crash has made fund sponsors more cautious in general about launching new ideas or defending ones that aren’t catching on very quickly.
The closures will bring to 95 the number of funds that are shutting so far this year. In 2011, 30 funds shut down, compared with 49 in 2010, 56 in 2009, 59 in 2008 and none in 2007, according to data compiled by IndexUniverse.
An official at Direxion said the company is paring down its presence in both the “insider sentiment” and “volatility response” slivers of the investment universe to just two funds. Those two ETFs and their assets are:
- Direxion All Cap Insider Sentiment Shares (NYSEArca: KNOW), $4.38 million
- Direxion S&P 500 RC Volatility Response Shares (NYSEArca: VSPY), $4.29 million
Details Of The Direxion Closures
The three funds being shut down were to stop trading Jan. 18 and be liquidated on Jan. 25, 2013, Direxion said in a press release.
The funds will close when all distributions are complete, the company said. The company said investors with questions about the shuttering should contact Direxion at 800-851-0511.
The in-kind stock transaction used in the Duracell deal lies of at the heart of every ETF, and has the same benefit: tax efficiency.
Stock investors are used to splits, but why all the reverse splits in ETFs?
Falling gas prices and a strong buck may boost retail stocks, but the favorite ETF may not be the best play.
An alluring new bond ETF focused on China’s mainland credit market comes with a few caveats.