Daily ETF Watch: ‘Trendpilot’ ETNs To Shut

Royal Bank of Scotland, the British bank that remains 63 percent owned by the U.K. government, this week said it plans to shut down its entire U.S.-listed lineup of 13 exchange-traded notes, including its first and most successful, the $488 million RBS US Large Cap Trendpilot ETN (TRND | B-70).

The company said in a press release that creations of new shares will be halted immediately for all 13 ETNs, and their redemptions will take place on or about July 7. The last day of trading for the ETNs will be July 6, RBS said. Total assets invested in the 13 ETNs are about $826 million, making TRND something of an outlier in its success.

"The expected redemption is a consequence of RBS plc's exit of the structured retail investor products business," the company said in the press release. It did not elaborate beyond that as far as reasons it might be pulling the plug on its U.S. ETN franchise.

One clue that something was shifting in RBS' corner of the exchange-traded product universe was the launch earlier this month of a lineup of competing "Trendpilot" securities by Pacer Financial. Pacer's new products are ETFs—not ETNs—but are broadly similar to the "Trendpilot" products RBS began bringing to market in late 2010.

The Trendpilot concept, as the name suggests, is a trend-following strategy that tracks stocks, gold or oil when those markets are rising, but switches to short-Treasurys exposure when bearish trends rear their heads in those markets.

RBS was bailed out by the British government at the height of the subprime mortgage crisis and, as noted, remains 63 percent state-owned at this time.

The 13 ETNs that are closing are as follows:

• RBS Global Big Pharma ETN (DRGS)
• RBS US Large Cap Alternator ETN (ALTL)
• RBS China Trendpilot ETN (TCHI)
• RBS Gold Trendpilot ETN (TBAR | B-47)
• RBS Nasdaq-100 Trendpilot ETN (TNDQ)
• RBS Oil Trendpilot ETN (TWTI | C)
• RBS US Large Cap Trendpilot ETN (TRND | B-70)
• RBS US MidCap Trendpilot ETN (TRNM)
• RBS Rogers Enhanced Commodity Index ETN (RGRC | F-38)
• RBS Rogers Enhanced Agriculture ETN (RGRA | F-54)
• RBS Rogers Enhanced Energy ETN (RGRE | F-63)
• RBS Rogers Enhanced Precious Metals ETN (RGRP | D-78)
• RBS Rogers Enhanced Industrial Metals ETN (RGRI | F-87)

Fund Launch

Separately, a new fund came to market today, the Deutsche X-trackers Japan JPX-Nikkei 400 Equity ETF, according to an online communique disseminated by NYSE Arca. The fund, which will target "high appeal" Japanese companies, has its primary listing on NYSE Arca with the ticker "JPN," according to information posted on Deutsche Bank's website.

The JPX-Nikkei Index 400 is composed of companies that meet requirements of global investment standards, such as efficient use of capital and investor-focused management perspectives. The index was jointly developed by Japan Exchange Group, the Tokyo Stock Exchange and Nikkei.

JPN has an annual expense ratio of 40 basis points, or $40 for each $10,000 invested.