FactorShares will liquidate its five spread ETFs on Nov. 22, after the sophisticated strategies withered on the vine with precious few assets.
The five ETFs and their assets are as follows:
- FactorShares 2X: Oil Bull/S&P 500 Bear ETF (FOL), $772,000
- FactorShares 2X: S&P 500 Bull/T-Bond Bear ETF (FSE), $1.3 million
- FactorShares 2X: S&P 500 Bull/USD Bear ETF (FSU), $2.73 million
- FactorShares 2X: T-Bond Bull/S&P 500 Bear ETF (FSA), $564,000
- FactorShares 2X: Gold Bull/S&P 500 Bear ETF (FSG), $2.31 million
The above 5 strategies—serving up spread strategies between the S&P 500 Index and oil, Treasury bonds, the dollar and gold, respectively—clearly garnered respect among sophisticated investors and advisors who extol the ways ETFs can integrate complex aims into one product wrapper. But they failed to attract the broader investment public in any significant way.
That failure to attract assets reflects a broader reality in the ETF industry; namely, that fund sponsors are starting to get wise to what the market will bear. Indeed, the rate of fund closures appears to be slowing, notwithstanding the latest closures.
The takeaway is that a good idea may not get the traction some think it ought to, if for no other reason than relatively simple strategies are still carrying the day for product sponsors.
The investment world was rocked by the news today that Hello Kitty is not actually a cat. But the pernicious mislabeling of some ETFs is even worse.
Movers and shakers in the ETF world are often just the opposite.
Be careful when making fruit-basket comparisons; you’re likely to come up with lemons.
With the S&P 500 topping 2,000, it’s worth understanding how you ended up in the wrong large-cap ETF.