Daily ETF Watch: Barclays’ Disabilities ETN

Barclays rolls out ETN focused on companies’ approach to people with disabilities.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

Barclays rolls out ETN focused on companies’ approach to people with disabilities.

Today Barclays launched an ETN on the NYSE Arca exchange that selects its components based on how they treat customers and employees with disabilities, a press release said.

The Barclays Return on Disability ETN (RODI) tracks a 100-stock index from the Donovan Group that focuses on large-cap U.S. stocks. Components are evaluated and quantitatively ranked based on their “observable activities” in three different areas. Those criteria address how companies recruit and hire employees with disabilities, how easy their products and services are for people with disabilities to access and use, and how they implement disability-friendly practices with regard to productivity.

RODI comes with an expense ratio of 0.45 percent.

The press release notes that the ETN is the second socially responsible ETN Barclays has launched. In July, it rolled out the Barclays Women In Leadership ETN (WIL), which covers the stocks of companies that have female CEOs or boards that have a significant number of female members.

SSgA Debuts Active Risk Management SPDR
On Wednesday, Sept. 10, State Street Global Advisors rolled out an actively managed ETF designed to respond to changes in the risk environment.

The SPDR SSGA Risk Aware ETF (RORO) first evaluates investors’ risk appetite using a wide range of quantitative measures such as market beta and liquidity, commodity investments and economic indicators, the prospectus said. When investors prefer to take on less risk, the portfolio will hold more defensive positions, but when more risk is desirable, the portfolio will invest in riskier holdings.

The prospectus notes that when a preference for moderate risk is indicated, the portfolio will take on a greater resemblance to a Russell 3000 portfolio.

The fund is fairly low-cost for an actively managed fund,and has a net annual expense ratio of 0.50 percent.

Closures Catching Up

With filings in a lull and no launches scheduled for the next day or two, it’s a good time to take a look at the pace of fund closures so far this year and how it compares with 2013.

The year had been a muted one for closures through its first seven months. At that point, less than 20 exchange-traded-product liquidations had been announced, but August and early September changed all that.

 

In just a few weeks, the number of fund closures announced in 2014 had doubled. ALPS kicked the trend off in mid-August when it said it would be closing four of its funds that are based on Goldman Sachs indexes.

Shortly after that, Pimco and iShares on the same day said that they would be closing four and 22 ETFs, respectively. Finally, in early September, Direxion said it would be closing five of its triple-exposure inverse ETFs.

With the dust from the carnage just beginning to clear, 2014 will have at least 51 ETP closures on the books when it comes to an end in a few months. Last year, there were 69 closures during the entire year.

One more good-sized wave of shutdowns could push 2014 past the prior year. However, 2012 is unlikely to be surpassed; it saw the announcement of 94 fund closures.

Except in the case of target-date-maturity bond funds, these closures are almost uniformly the result of a failure on the funds’ part to gather assets under management in a timely manner. For this reason, most ETF market participants see fund closures as a positive thing for the industry overall.

Industry Maturing

The rapid expansion of the ETF industry means that not all of its growth has been sustainable; fund closures represent a necessary pruning.

“We’re starting to see maturation in the industry,” Dave Nadig, ETF.com’s chief investment officer, said in an interview after the Direxion closures were announced. “Things like the iShares closure of the target-date series are part of that. Issuers seem less willing to invest in maintaining product lines that aren’t meeting real investor needs than they might have been a decade ago, when it seemed like every idea was a good idea.”

Roughly 136 funds have launched so far this year, versus 101 during the same time period last year. In all of 2013, 162 funds were rolled out; more than 50 of those launches occurred in the last quarter of the year. In other words, a lot could happen in the next few months.

 

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.