Ameristock To Close Five Bond ETFs

By
Murray Coleman
May 29, 2008
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While shutterings sure to spark debate, ETFs represent a niche and well-represented part of the bond marketplace.

 

A little more than three months after the first major shuttering of exchange-traded funds took place, the axe is about to fall again.

In a brief statement released on Wednesday, Ameristock Corp. said it plans to close its five Treasury bond ETFs that launched last June. The firm serves as the funds' advisor and works with Ryan ALM Inc., a well-known fixed-income asset manager which provided the underlying indexes.

Ameristock founder Nicholas Gerber didn't immediately return calls. When reached on Thursday, Ryan ALM's Chief Executive Ron Ryan deferred comments to Gerber about any ETF-related marketing matters.

The bond portfolios had roughly $13 million in combined assets.

The closings mark the second significant shuttering in a market experiencing hypergrowth in the number of funds opened during the past several years.

In late January, Claymore Securities announced the shuttering of 11 ETFs. That process was completed in late February. (See related article here.)

But the Claymore 11 were stock portfolios. The Ameristock/Ryan closings represent the first big shuttering in bond ETFs, which didn't really start coming onto the market in great numbers until last year.

The funds set to close by June 19 are:

  • Ameristock/Ryan 1 Year Treasury (AMEX: GKA)
  • Ameristock/Ryan 2 Year Treasury (AMEX: GKB)
  • Ameristock/Ryan 5 Year Treasury (AMEX: GKC)
  • Ameristock/Ryan 10 Year Treasury (AMEX: GKD)
  • Ameristock/Ryan 20 Year Treasury (AMEX: GKE)

While the closings are sure to spark concern that more are on the way, the Ameristock/Ryan ETFs competed in an already-stacked field. Some 10 other pure-play Treasury ETFs are also being offered. Those cover almost every different range along the yield curve, diminishing the appeal of the Ameristock/Ryan family's niche.

In addition, investors can still tap into any number of total market bond funds. For example, the cheapest of its kind on the market, the Vanguard Total Bond Market ETF (AMEX: BND) has almost a third of its portfolio in Treasury and related agency issues.

The Ameristock/Ryan funds have badly lagged their competition since inception in terms of attracting assets. For example, iShares Lehman 7-10 Years Treasury (NYSE Arca: IEF) had more than $2.7 billion in assets heading into May. Even its intermediate-term iShares Lehman 3-7 Year Treasury Bond (NYSE Arca: IEI) had attracted $485 million. The most popular among the group remains iShares Lehman 1-3 Year Treasury Bond (NYSE Arca: SHY) at nearly $9.3 billion.

On the short end of the spectrum, the SPDR Lehman 1-3 Month T-Bill (AMEX: BIL) had around $220 million. The smallest of the group without Ameristock/Ryan included was the Vanguard Extended Duration Treasury Index ETF (AMEX: EDV) with $14.5 million in assets.

For current shareholders, an important date to remember is June 10. After that, they won't be able to redeem shares.

(See a recent interview with Ron Ryan, the company's founder and chief executive, here.)

 

ETF DAILY DATA

The small-cap fund 'IWM' added money on Thursday, Jan. 22, as net inflows and markets stoked higher by eurozone QE news lifted total U.S.-listed ETF assets above $2 trillion.

A slew of iShares funds, including the eurozone-focused 'EZU,' paced the firm's issuer-leading inflows on Thursday, Jan. 22. The ECB's announcement about aggressive QE in the eurozone stoked markets and lifted total U.S.-listed ETF assets to more than $2 trillion.

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