ETF Deathwatch For June 2019

By Daniel Poppe

For the month of June, the ETF Deathwatch increased in size. Twenty-nine exchange-traded products (“ETPs”) were added to the list, and 17 funds were removed, making June a busier month in terms of additions. Of the removals, six were removed due to increased health and 11 were due to asset managers closing their funds.

June was a strong month for domestic equity markets, so the high number of funds added to the Deathwatch in June was unanticipated. Many additions were index-tracking ETFs. These additions may be due to a delayed response to the market correction that occurred in May.

For June, the additions were mostly equity ETFs from Asia and a few thematic or sector-specific strategy ETFs. Of the additions this month, only one was added because its AUM was consistently below $5 million for three months. The rest were added due to low average daily volume. It is possible that these additions may have enough AUM to keep them from closure; however, our system takes into account both AUM and volume, so it’s likely that should volume and interest remain low, these funds may be considered for closure. Low volume in these funds in June could be the aftermath of the market correction in May. Investors may have been waiting for a better time to buy or sell these assets.

The addition of 11 funds tracking Asian indexes was to be expected, given the increase in trade tensions between China and the U.S. during the month. Seven of these Asian indexes are Chinese. Equities have been reacting to the increasing trade tensions and fears of global economic slowdown for months. Money managers may have chosen this time to get out of the Asian market indexes to avoid further risk from increasing trade tensions. As money managers allocate to safer holdings, the average daily trading volume in equity-index ETFs is bound to decline.

The 11 funds that closed last month were either strategically managed or niche products, so their closures do not come as a surprise. During June’s trading period, the fund managers may have concluded that these funds were underperforming significantly or that their AUM was too low to continue operating the funds.

There are 45 ETFs and ETNs on Deathwatch this month that have been in the market for more than 10 years. This is a long time for ETPs to exist while remaining on our Deathwatch list. Leveraged and short ETF instruments, as well as a number of commodity ETPs, dominate our list of funds older than 10 years. It’s possible that the fund companies managing these products will allow them to remain active, as they play a part in a larger role for their clients that are interested in active management.

The average asset level of the threatened ETFs on ETF Deathwatch increased from $7.45 million to $7.68 million, and 44 products had less than $2 million in assets. The average age of products on the list increased from 47.54 months to 47.75 months, and the number of products more than 5 years of age increased from 112 to 115. The largest ETF on the list had an AUM of $24.96 million, while the smallest had assets of just $458,590.

Here is the Complete List of 454 ETFs and ETNs on ETF Deathwatch for June 2019 compiled using the objective ETF Deathwatch Criteria.

The 29 ETFs/ETNs added to ETF Deathwatch for June:

1. Xtrackers MSCI ACWI EX USA ETF (NYSEARCA:ACSG)
2. AlphaClone Alternative Alpha ETF (NYSE:ALFA)
3. GLOBAL X MSCI CHINA HEALTH (NYSEARCA:CHIH)
4. GLOBAL X MSCI CHINA INFO ETF (NYSEARCA:CHIK)
5. GLBL MSCI CHINA LARGE CAP (NYSEARCA:CHIL)
6. GBL X MSCI CHINA REAL ESTATE (NYSEARCA:CHIR)
7. GBL X MSCI CHINA CONSUMER STAPLES (NYSEARCA:CHIS)
8. GLOBAL X MSCI CHINA UTIL ETF (NYSEARCA:CHIU)
9. Market Vectors Renminbi/USD ETN (NYSEARCA:CNY)
10. First Trust Dorsey Wright Momentum & Value ETF (NASDAQ:DVLU)
11. Xtrackers MSCI EMERGING MARK (NYSEARCA:EMSG)
12. Franklin FTSE Japan Hedged ETF (NYSEARCA:FLJH)
13. Franklin FTSE South Korea ETF (NYSEARCA:FLKR)
14. Principal Millennials Index ETF (NASDAQ:GENY)
15. WISDOMTREE YL EHD GBL AGG BD (NYSEARCA:GLBY)
16. SPDR Kensho Smart Mobility ETF (NYSEARCA:HAIL)
17. iShares Currency Hedged MSCI South Korea ETF (NYSEARCA:HEWY)
18. INVESCO MULTI-FACTOR DEFENSIVE (IMFD)
19. Point Bridge Gop Stock Tracker ETF (NYSE:MAGA)
20. SPDR Kensho Final Frontiers ETF (NYSEARCA:ROKT)
21. Global X MSCI SuperDividend Emerging Markets (NYSEARCA:SDEM)
22. SPDR Kensho Intelligent Structures ETF (NYSEARCA:SIMS)
23. Defiance Future Tech ETF (NYSEARCA:VIDG)
24. CUSHING ENERGY & MLP ETF (NYSEARCA:XLEY)
25. CUSHING ENERGY SPLY CHAIN ETF (NYSEARCA:XLSY)
26. CUSHING TRANSPORT & MLP ETF (NYSEARCA:XLTY)
27. CUSHING UTILITY & MLP ETF (NYSEARCA:XLUY)
28. Invesco Russell MidCap Equal Weight ETF (NYSEARCA:XMHQ)
29. SPDR Solactive Hong Kong ETF (NYSEARCA:ZHOK)

The 11 ETFs/ETNs that were closed:

1. Defiance Future Tech ETF (AUGR)
2. Global X JPMorgan Efficiente Index ETF (NYSEARCA:EFFE)
3. Columbia EM Quality Dividend ETF (NYSEARCA:HILO)
4. Principal International Multi-Factor Index ETF (NASDAQ:PXUS)
5. Columbia India Small Cap ETF (NYSEARCA:SCIN)
6. Global X JPMorgan US Sector Rotator Index ETF (NYSEARCA:SCTO)
7. ETF Industry Exposure & Financial Services ETF (NYSEARCA:TETF)
8. SPDR Kensho Clean Power ETF (XKCP)
9. SPDR Kensho Final Frontiers ETF (XKFF)
10. SPDR Kensho Intelligent Structures ETF (XKII)
11. SPDR Kensho Smart Mobility ETF (XKST)

The 6 ETFs/ETNs removed from ETF Deathwatch due to improved health:

1. First Trust Dow 30 Equal Weight ETF (NYSEARCA:EDOW)
2. Xtrackers MSCI All World ex US High Dividend Yield Equity ETF (NYSEARCA:HDAW)
3. iShares Edge High Yield Defensive Bond ETF (NYSE:HYDB)
4. Pacer Funds Trust-Pacer Benchmark Industrial Real Estate Sctr ETF (NYSEARCA:INDS)
5. iShares 10+ Year Investment Grade Corporate Bond ETF (NYSE:LLQD)
6. American Century Diversified Municipal Bond ETF (NYSEARCA:TAXF)

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.