ETF Closures Outstrip Launches

Closures were off to a strong start in 2020 after Invesco shut down more than 40 ETFs, but things got really crazy in March when global markets collapsed. We currently stand at nearly 100 ETF closures before we are even halfway through 2020.

Launches, in contrast, are closing in on 60. Such a situation, with launches trailing far behind closures, is unprecedented.

What is remarkable about the list of closures is the fact that 32 of the ETFs that closed this year are leveraged and inverse funds, and all of those shuttered in March, when wild market swings were magnified by the 3x and 2x exposures.

Fully half of the affected products are ETNs, and a quarter are directly related to the energy industry, which has been particularly hard hit.

Another good chunk of the completed closures (23) year to date were ETFs targeting international equities.

Among the launches, the majority (33) target U.S. equities, while 31, or more than half, are actively managed. Only one of those nearly 60 ETFs offers geared exposure.

It is clear there is a shift taking place in the ETF space, though how severe and enduring it is remains to be seen. 

More Closures Ahead

However, the closure storm doesn’t look like it’s letting up anytime soon. Other shutdowns have been announced that will complete later in the year, including 10 WisdomTree ETFs, some of which have fairly significant assets.

The funds are set to close on May 27 and are as follows:

• WisdomTree Negative Duration U.S. Aggregate Bond Fund (AGND)
• WisdomTree Asia Pacific ex-Japan Fund (AXJL)
• WisdomTree Dynamic Long/Short U.S. Equity Fund (DYLS)
• WisdomTree Emerging Markets Consumer Growth Fund (EMCG)
• WisdomTree Europe Multifactor Fund (EUMF)
• WisdomTree Yield Enhanced Global Aggregate Bond Fund (GLBY)
• WisdomTree Middle East Dividend Fund (GULF)
• WisdomTree Negative Duration High Yield Bond Fund (HYND)
• WisdomTree Japan Multifactor Fund (JNMF)
• WisdomTree ICBCCS S&P China 500 Fund (WCHN)

JNMF has roughly $1 million in assets under management, but AXJL has more than $22 million. That said, JNMF launched two years ago, while AXJL rolled out more than a decade ago and has had plenty of time to gather assets.

It should be noted, however, that WisdomTree had more than $40 billion in assets under management at the start of the year. Currently, the firm has roughly $30 billion in AUM, meaning it lost a quarter of its assets. That’s the steepest asset decline among the top 10 issuers.

Contact Heather Bell at [email protected]

2020 ETF Closures