Barclays ETNs Crowd Path Of The Walking Dead

March 22, 2017

There’s a lot written about the biggest ETFs, about the amount of new assets they are attracting, about how big a market share they consume and about how they revolutionized investing.

All the top ETFs measured by assets under management are excellent products that trade like water and are popular because they deliver what they say they will, which is usually plain-vanilla, broad market equity exposure at a dirt cheap price—you know, ETFs like the $237 billion SPDR S&P 500 ETF Trust (SPY), the $102 billion iShares Core S&P 500 ETF (IVV), the $76 billion Vanguard Total Stock Market Index Fund (VTI) and so on.

But if you flip the list and take a look at the ETFs with the least amount of assets, it’s a different story. And it’s one that’s interesting from an issuer perspective, but it’s also a cautionary tale for investors.

Here are the 10 ETFs/ETNs with the lowest amount of assets—think of them as the opposite end of the spectrum from ETFs we just talked about that have assets of $200 billion, $100 billion and $76 billion in assets. Note that seven of the 10 products are ETNs from Barclays, under the iPath brand.

10 ETFs With Least Amount Of Assets

Ticker Fund AUM ($K) Expense Ratio (%) Spread (%) Launch Date
XXV iPath Inverse S&P 500 VIX Short-Term Futures ETN 431 0.89 0.93 7/16/2010
HEVY iPath Pure Beta Industrial Metals ETN  522 0.85 0.54 4/20/2011
IVOP iPath Inverse S&P 500 VIX Short Term Futures ETN II  550 0.89 1.60 9/16/2011
ADZ DB Agriculture Short ETN  555 0.75 2.04 4/14/2008
LEDD iPath Pure Beta Lead ETN  602 0.85 0.94 4/20/2011
SBV iPath Pure Beta S&P GSCI-Weighted ETN  627 0.85 0.39 4/20/2011
GRWN iPath Pure Beta Softs ETN  632 0.85 0.27 4/20/2011
FOIL iPath Pure Beta Aluminum ETN  632 0.85 0.66 4/20/2011
SOP ProShares UltraShort Oil & Gas Exploration & Production  647 0.95 0.77 6/23/2015
AGA DB Agriculture Double Short ETN  653 0.75 0.74 4/14/2008

 

Little Funds, Big Spreads

The IPath Inverse S&P 500 VIX Short-Term Futures ETN (XXV) has $431,000 in assets, the smallest of any U.S.-listed exchange-traded product. At No. 10 is the DB Agriculture Double Short ETN (AGA), with $653,000 in AUM.

XVV has an expense ratio of 0.89% and an average trading spread of 0.93%, costing investors nearly 2% just to get into the fund. And good luck getting out. AGA is a bit better, with a 0.75% expense ratio and an average spread of 0.74%. But still, ouch.

Of course, the wide spreads are a symptom of the pittance in assets. Market makers are not going to lose money selling these funds to you, they will get their arbitrage. The funds in between all have the same affliction—high expense ratios, because they are niche products; and wide spreads, because they don’t trade much.

The iPath Inverse S&P 500 VIX Short-Term Futures ETN II (IVOP) serves up an expense ratio of 0.89% and average trading spreads of 1.60%. That’s almost 2.5% before it lands in your brokerage account.

 

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