This week, significant developments are afoot in the exchange-traded note space. First, Deutsche Bank is closing the majority of its ETNs. Second, two Barclays volatility ETNs are amending their tickers to those of products that matured in January.
Deutsche Bank Closes 12 ETNs
On April 11, Deutsche Bank delisted 12 of its 16 ETNs (read: "Deutsche Closing Bulk Of ETNs"). The delisted ETNs, as well as their remaining assets under management (AUM) as of April 10, are as follows:
|Deutsche Bank ETNs Closing|
|Ticker||Fund||Remaining AUM ($M)||Inception Date|
|DAG||DB Agriculture Double Long ETN||4.74||4/14/2008|
|AGF||DB Agriculture Long ETN||0.70||4/14/2008|
|BOM||DB Base Metals Double Short ETN||0.44||6/16/2008|
|BDD||DB Base Metals Double Long ETN||1.26||6/16/2008|
|BOS||DB Base Metals Short ETN||0.53||6/16/2008|
|DYY||DB Commodity Double Long ETN||1.23||4/14/2008|
|DDP||DB Commodity Short ETN||0.34||4/28/2008|
|SZO||DB Crude Oil Long ETN||0.86||6/16/2008|
|OLO||DB Crude Oil Short ETN||5.14||6/16/2008|
|DOD||Elements Dogs of the DOW Dow Jones High Yield Select 10 Total Return ETN||37.72||11/7/2007|
|WMW||Elements Morningstar Wide Moat Focus Total Return Index ETN||18.56||10/17/2007|
|FIEG||FI Enhanced Global High Yield ETN||4.98||10/8/2013|
Source: ETF.com; data as of April 10, 2019
The four remaining Deutsche Bank ETNs provide short and long exposure to gold futures, as well as double short exposure to crude oil:
- DB Gold Double Long ETN (DGP)
- DB Gold Double Short ETN (DZZ)
- DB Crude Oil Double Short ETN (DTO)
- DB Gold Short ETN (DGZ)
Most Products Were Low-Asset
With the exception of the Deutsche Bank FI Enhanced Global High Yield ETN (FIEG), which is a product custom-built for Fisher Investments, most of the ETNs being delisted had traded for over a decade.
However, all but two closed with less than $10 million in AUM. The two exceptions were Elements-branded ETNs: the Elements Morningstar Wide Moat Focus Total Return Index ETN Index (WMW), with $19 million in AUM; and the Elements Dogs of the DOW Dow Jones High Yield Select 10 Total Return ETN (DOD), with $38 million.
Combined, the closing ETNs had a total of $76.5 million in AUM remaining.
Delisting Not Same As Calling
Although the ETNs are being delisted, they'll still be available for over-the-counter trading. ETF.com treats such actions as closures, however.
Delisting differs from when an ETN is "called," meaning the issuer redeems the note, paying out its fair value minus fees.
In this case, issuances of new notes have been suspended since Jan. 1, 2016, and Deutsche Bank warns in its press release that, after delisting, the ETNs could see a "significant drop in liquidity" in the secondary market.
However, investors may continue to exercise their repurchase rights after delisting, says Deutsche Bank. To help investors exit the ETN, Deutsche Bank has lowered the minimum repurchase size to 500 securities.
'VXXB', 'VXZB' To Change To 'VXX', 'VXZ'
Meanwhile, on May 1, two Barclays ETNs will be trading under new-yet-old tickers. The iPath Series B S&P 500 VIX Short Term Futures ETN (VXXB) will now trade under the ticker “VXX,” while the iPath Series B S&P 500 VIX Mid-Term Futures ETN (VXZB) will trade under the ticker “VXZ.”
However, VXXB and VXZB now boast some additional investor-friendly features their previous incarnations did not, including a call feature, a lower expense ratio, the ability to split shares as needed, and more.
Since VXX's maturity, VXXB has become as popular as its predecessor ever was. The fund has amassed $864 million in assets under management and trades on average $749 million in daily volume.
However, VXZB remains a smaller, more thinly traded fund, with $14 million in assets under management and about $0.3 million in average daily volume.
VXXB and VXZB—or, rather, the soon-to-be VXX and VXZ—have a maturity date of Jan. 23, 2048.
Contact Lara Crigger at [email protected]