We’ve just passed the halfway mark for the year, and the list of ETF closures is bumping up against 150 shutdowns. There are also at least 20 more ETF closures in the works, set to be completed by early September.
That’s a strong and steady pace of liquidations in a year that has been marked by massive disruption due to a global pandemic and subsequent economic shutdown across the world.
One of the big drivers of ETF closures this year is, indeed, the coronavirus pandemic, but the industry has been seeing a significant number of closures, generally more than 100, on an annual basis for quite a few years. That's just to be expected given the number of products currently on the market: There are more than 2,300 ETFs trading, and almost 1,000 of them have $50 million or less in assets under management.
Most see closures as a healthy sign of industry consolidation and maturity—products that don’t find traction are pulled out of the market. But consider that in the first six months, we had only 127 ETF launches. This is the first time that ETF closures have outstripped launches, making 2020 a year of “firsts” for yet another reason.
Contact Heather Bell at [email protected]