ETF Watch: Fund Closure Pace Slows

The month of May saw eight ETFs shut down—after just one in April. 

ETF.com
Reviewed by: etf.com Staff
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Edited by: etf.com Staff

The latest exchange-traded product to be shuttered is the Credit Suisse X-Links Long/Short Equity ETN (CSLS), which stopped trading last Thursday, May 25.

CSLS brings year-to-date ETF closures to 30 funds, five fewer than the 35 ETFs we saw shutter in the first five months of last year. 

In the majority of the cases, ETFs are closed due to lack of assets. Running an ETF can be a costly business, with some estimates pegging issuer costs at anywhere from $250,000 to $500,000 a year to keep one ETF going.

In a recent story about the costs of ETFs, we offered the following example of how the math works:

Say you launched a smart-beta ETF that carries a 0.50% expense ratio. For your ETF to be viable, you would need at least $50 million in AUM just to break even, if your annual costs are at the low end of $250,000. At those levels, with $50 million in AUM, you are merely going to cover your costs.

In other words, it takes money to keep an ETF listed and running. As expense ratios get compressed, that “viability” bar only gets higher, and many of the ETFs that land on the chopping block have far fewer assets than $10 million.

But closures, by and large, are considered a good sign of consolidation in an industry that’s maturing. There are today 2,017 U.S.-listed ETFs on the market, commanding $2.905 trillion in total assets—a market that’s consistently growing at a 20-25% a year pace.

Below are the exchange-traded products that have closed so far this year: 

 

Fund & Ticker
Credit Suisse X-Links Long/Short Equity ETN (CSLS)
AdvisorShares Morgan Creek Global Tactical ETF (GTAA)
AdvisorShares Global Echo ETF (GIVE)
Deutsche X-Trackers MSCI Australia Hedged Equity ETF (DBAU)
Deutsche X-Trackers MSCI Spain Hedged Equity ETF (DBSP)
Deutsche X-trackers Dow Jones Hedged International Real Estate ETF (DBRE)
Deutsche X-trackers S&P Hedged Global Infrastructure ETF (DBIF)
Deutsche X-Trackers Japan JPX-Nikkei 400 Hedged Equity ETF (JPNH)
AdvisorShares Athena High Dividend ETF (DIVI)
PIMCO Diversified Income Active ETF (DI)
PIMCO Global Advantage Inflation-Linked Bond Active ETF (ILB)
Direxion Daily Cyber Security & IT Bear 2x Shares (HAKD)
Direxion Daily Pharmaceutical & Medical Bull 2x Shares (PILL)
Direxion Daily Pharmaceutical & Medical Bear 2x Shares (PILS)
WisdomTree Korea Hedged Equity Fund (DXKW)
WisdomTree Australia & New Zealand Debt Fund (AUNZ)
WisdomTree Indian Rupee Fund (ICN)
WisdomTree Japan Hedged Tech Media & Telecom Fund (DXJT)
WisdomTree Japan Quality Dividend Growth Fund (JDG)
WisdomTree International Hedged Equity Fund (HDWM)
WisdomTree International Hedged SmallCap Dividend Fund (HDLS)
Elkhorn S&P 500 Capital Expenditures Portfolio (CAPX)
Elkhorn FTSE RAFI U.S. Equity Income ETF (ELKU)
RBC S&P 500 Trend Allocator Index ETN (TALL)
Oppenheimer Global Growth Revenue ETF (RGRO)
Oppenheimer ADR Revenue ETF (RTR)
Gavekal Knowledge Leaders Emerging Markets ETF (KLEM)
ETFS Zacks Earnings Small-Cap U.S. Index Fund (ZSML)
ETFS Zacks Earnings Large-Cap U.S. Index Fund (ZLRG)
RBC Yorkville MLP Distribution Growth Leaders ETN (YGRO)

 

Contact Cinthia Murphy at [email protected]

 

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