Daily ETF Watch: Van Eck To Shut 5 Funds

Van Eck plans to nix five funds in a culling of the weak in its otherwise-vibrant herd of ETFs.

Olly
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Managing Editor
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Reviewed by: Olly Ludwig
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Edited by: Olly Ludwig

Van Eck Global, the asset manager behind the $6 billion Market Vectors Gold Miners ETF (GDX | B-70), plans this month to shutter five ETFs that haven’t gathered many assets, a pruning process that analysts view as a healthy aspect of the growing “ETF ecosystem.”

The five funds, which together have about $37 million in assets under management, will leave New York-based Van Eck with a total of 59 Market Vectors ETFs and about $22 billion in exchange-traded fund assets, according to data compiled by ETF.com. The five funds will stop trading after the session on Dec. 12, and will be liquidated on or about Dec. 23, Van Eck said in a press release.

The five ETFs, and their assets under management, are as follows:

The pace of closures this year looks similar to a year ago, with 65 strategies shuttered so far this year—including the five Van Eck funds—compared with 69 closures last year.

So far in 2014, 188 new ETFs have been launched, compared with 162 launches in all of 2013, according to data compiled by ETF.com.

Total assets in more than 1,660 ETFs are now nearly $1.996 trillion—just $4 billion short of the $2 trillion threshold. Assets keep flowing into ETFs, fund launches continue apace and markets keep pushing upward into record territory almost six years after the subprime mortgage crisis cratered markets and brought the global economy to the brink of a full-scale meltdown.

Noteworthy China-Fund Shuttering

Of the five closures Van Eck is planning, perhaps the most noteworthy is the shuttering of CHLC, a China bond fund focused on so-called dim sum bonds issued by entities outside of China but in Chinese currency.

The plan to close CHLC follows by less than a month the launch of the Market Vectors ChinaAMC China Bond ETF (CBON), a fund focused on credits issued in the much larger and more liquid mainland Chinese bond market.

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The move suggests Market Vectors will cede the dim sum bond ETF market to the well-established $157 million PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM | B) and instead focus its resources on staking a claim in the huge mainland China bond market.

Bye-Bye To Another ‘HOLDR’

The other shuttering among the five doomed Market Vectors ETFs that’s worth noting is RKH, the bank and brokerage ETF. Until RKH was “relaunched" about three years ago, it was an exchange-traded “HOLDR.”

Those securities, initially issued by Merrill Lynch, were set-and-forget “proto-ETFs,” meaning they functioned with the creation and redemption mechanism of ETFs, but were not based on any index.

They were snapshots in time, reflections of ascendant industries at the time they were launched and, because they weren’t organized around dynamic and changing indexes, became distortions and vestiges that were slowly fading in relevance.

They were rescued from obscurity by Van Eck in December 2011, and while some of the six HOLDRs that Van Eck morphed into bona fide index ETFs have thrived, such as the nearly $1 billion Market Vectors Oil Services ETF (OIH | A-39), the ill-fated RKH was clearly not among those.

RKH thus stands as a small-time testament of one of the many twists and turns in a dynamic 22-year-old ETF industry that continues to expand.

 

Olly Ludwig is the former managing editor of etf.com. Previously, he was a financial advisor at Morgan Stanley Smith Barney and an editor at Bloomberg News. Before that, Ludwig was a journalist at the Reuters News Agency in New York.