XShares, Dreams Dashed, Sold To Deutsche

By
Steve Dew
July 07, 2010
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XShares, the company famous for slicing and dicing ETFs to a point many considered absurd, was sold to a unit of Deutsche Bank, ending a tale of unrealized dreams.

XShares Group, the parent of ETF sponsor XShares Advisors LLC, announced the sale of its ETF subsidiary, known for its ill-fated HealthShares family of finely calibrated healthcare funds, to a Deutsche Bank unit.

The sale of XShares appears to be the final chapter of a story of unrealized dreams for the fund sponsor. The HealthShares family of funds had difficulty attracting investors, which at one point sliced and diced the healthcare sector into 19 categories, including cardiology, cancer, dermatology and orthopedic repair.

In August 2008, XShares closed 15 of its 19 HealthShare funds. The four surviving funds were its Cancer ETF (NYSEArca: HHK), its European Drugs ETF (NYSEArca: HRJ), its Diagnostics ETF (NYSEArca: HHD) and its Enabling Technologies (NYSEArca: HHV) funds intact. But they too were shuttered in December.

XShares also made an ill-timed foray into U.S. real estate. In June 2008, XShares closed down its AdelanteShares family of real estate ETFs, which came to market after the U.S. housing bubble began deflating and just before financial markets went into a free fall following the collapse of Lehman Brothers. The AdelanteShares family of seven funds had accumulated only $17 million in assets when the end came.

XShares Advisors LLC has been rechristened DBX Strategic Advisors, according to David Lukas, a spokesman for XShares Group. Under terms of the sale, DBX Strategic Advisors will take over the day-to-day management of the remaining XShares ETFs, five TDX Independence target-date funds. An official at Deutsche Bank declined to comment.

The XShares Group, which will operate under the new moniker BNDRE Holdings, plans to focus on investments in distressed U.S. real estate.

ETF DAILY DATA

'HEDJ,' the euro-hedged equity fund, added $199 million on Friday, Jan. 23, as total U.S.-listed ETF assets ended the day at $2.016 trillion.

'IWM,' 'HYG' and 'EEM' paced iShares' issuer-leading inflows on Friday, Jan. 23, as total U.S.-listed ETF assets rose to $2.106 trillion.

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