A chapter in the history of exchange-traded products is closed with the demise of the last of the HOLDRS.
The final 11 HOLDRS, which collectively had about $305 million in assets, were terminated today by their sponsor, Merrill Lynch, Pierce, Fenner & Smith, ending the lives of a family of exchange-traded products whose time has come and gone with the explosion of ETFs.
The dissolution of the 11 HOLDRS funds comes on the heels of the switch on Dec. 21 of six HOLDRS funds into Van Eck Global ETFs. The six HOLDRS involved in the Van Eck transfer had about $3.5 billion going into the exchange offer, and Van Eck said $2.3 billion of those assets went into its six new ETFs. The six securities chosen by Van Eck for the exchange offer held about 90 percent of all HOLDRS assets.
Arca, the New York Stock Exchange’s electronic trading platform, said today in a communiqué to investors that it will suspend trading in each of the 11 remaining HOLDRS prior to the opening of business on Tuesday, Dec. 27, and all open orders will be canceled at that time. Merrill Lynch said in August not long after Van Eck announced its exchange-offer plans that it aimed to shut the 11 remaining HOLDRS.
HOLDRS comprise holding company receipts that Merrill launched in the late 1990s and the early 2000s. They were narrowly focused portfolios that never readjusted their composition the way ETFs do. While they are exchange traded like ETFs, their set-and-forget structure made them increasingly irrelevant, though they remained valued for their liquidity by big investors looking for hedging tools.
Investors who owned HOLDRS will receive coupons that they can either turn into cash based on the value of the securities at the time they redeem their coupons, or they can take explicit possession of the individual securities that were previously packaged as HOLDRS.
That’s also the case for those investors who didn’t take Van Eck up on its exchange offer this week. Shareholders with about $1.2 billion in assets held in the six HOLDRS that became Van Eck ETFs didn’t tender their HOLDRS shares.
The 11 HOLDRS that were dissolved today, their tickers and their assets as of Dec. 22 are as follows:
- Broadband HOLDRS Trust (NYSEArca: BDH), $13.64 million
- B2B Internet HOLDRS Trust (NYSEArca: BHH), $8.49 million
- Europe 2001 HOLDRS Trust (NYSEArca: EKH), $3.68 million
- Internet HOLDRS Trust (NYSEArca: HHH), $47.34 million
- Internet Architecture HOLDRS Trust (NYSEArca: IAH), $29.82 million
- Internet Infrastructure HOLDRS TRUST (NYSEArca: IIH), $5.37 million
- Market 2000+HOLDRS Trust (NYSEArca: MKH), $9.76 million
- Software HOLDRS Trust (NYSEArca: SWH), $27.14 million
- Telecom HOLDRS Trust (NYSEArca: TTH), $99.88 million
- Utilities HOLDRS Trust (NYSEArca: UTH), $45.68 million
- Wireless HOLDRS Trust (NYSEArca: WMH), $10.67 million