Big Developments In ETNs

April 10, 2019

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:

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.”

The tickers should be familiar: VXX and VXZ were the tickers for similar volatility ETNs that matured at the end of January (read: "Big Shift In Volatility ETNs This Week").

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]

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