ETFs See New Closure Record

At the end of 2018, ETFs clearly had a busy year when it came to launches and closures.

Closures stood at 152 as of Dec. 31, blowing 2017’s record of 138 ETF shutdowns out of the water. Of course, that number was boosted quite a bit by Barclays’ unprecedented closure of 50 of its iPath ETNs in April. Take those away from the total, and it would have been a pretty low-key year.

Launches fell short of the more than 270 ETFs that debuted in the previous year, with 2018 racking up just 267 new ETFs. That’s still an impressive number, but in combination with the steady increase in closures, it suggests a new stage of maturity for the ETF industry.

Asset Class Breakdown

Unsurprisingly, U.S. equity was the largest category for launches, representing 28.5% of the total. International equity was a close second, with 27% of the total. U.S. fixed income constituted 13.5% of all launches for the year, with international fixed income representing 8.2%. That’s a little surprising given that many commented in 2017 that they expected to see significant increases in the number of fixed-income ETFs given the size of the global fixed-income market relative to the global equity market.

Most interesting perhaps of all the launch categories was commodities, which were nearly 8% of the total. That’s twice the percentage for the previous year, and a massive jump from the 1% for 2015. Twenty-one commodity ETFs launched in 2018, three of which were gold ETFs. With global equity struggling, it appears issuers are expecting investors to look more toward other asset classes, and not necessarily fixed income.

Leveraged and inverse funds represented 6% and 2.2% of all launches, respectively, while asset allocation and alternatives stood at 4.1% and 2.6%, respectively.

Contact Heather Bell at [email protected]