ETF Deathwatch For August 2019

By Ansh Chaudhary

For the month of August, the ETF Deathwatch increased in size. Sixteen exchange-traded products (“ETPs”) were added to the list and 10 funds were removed, making August a busier month in terms of additions. Of the removals, three were removed due to increased health and six were due to asset managers closing their funds.

August was a volatile period in the equity market, which whipsawed back and forth, essentially finishing the month at the same place it started.

For August, the additions consisted of a few niche products and index-tracking equity ETFs, mostly international. Of the additions this month, one was added because its AUM was consistently below $5 million for three months. The rest were added due to low average daily volume. 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. The low volume in these funds for the month could be due to increased volatility in response to current events. Investors may have been waiting for a better time to buy or sell these assets.

The addition of equity ETFs to the Deathwatch list wasn’t surprising. Increasing trade tensions, Brexit drama, and global concerns about the Amazon rainforest made August a tricky month to navigate. It’s no wonder 10 of the 16 additions to the Deathwatch list have been international funds. Trade and environmental concerns have caused these funds to struggle for the month in terms of volume. The other six funds seem to be more niche products, which tend to have low volume in times of market volatility and tension when money managers avoid riskier investments. As money managers allocate to safer holdings, the average daily trading volume in equity index ETFs is bound to decline.

There are 49 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 larger role for their clients who are interested in active management.

The average asset level of the threatened ETFs on ETF Deathwatch increased from $7.47 million to $7.61 million, and 52 products had less than $2 million in assets. The average age of products on the list increased from 47.74 to 49.86, and the number of products more than 5 years of age increased from 119 to 126. The largest ETF on the list had an AUM of $24.73 million, while the smallest had assets of just $448,030.

Here is the Complete List of 468 ETFs and ETNs on ETF Deathwatch for August 2019 compiled using the objective ETF Deathwatch Criteria.

The 16 ETFs/ETNs added to ETF Deathwatch for August:

1. Xtrackers MSCI China A Inclusion Equity ETF (ASHX)
2. AdvisorShares Sabretooth ETF (BKCH
3. First Trust China AlphaDEX Fund (FCA)
4. Fidelity Targeted Emerging Markets Factor ETF (FDEM)
5. Fidelity Targeted International Factor ETF (FDEV)
6. Fidelity International Value Factor ETF (FIVA)
7. Cambria Foreign Shareholder Yield ETF (FYLD)
8. John Hancock Multifactor Energy ETF (JHME)
9. O’Shares FTSE Europe Quality Dividend ETF (OEUR)
10. Global X MSCI Portugal ETF (PGAL)
11. NYSE Pickens Oil Response ETF (RENW)
12. Hartford Multifactor REIT ETF (RORE)
13. ProShares Ultra SmallCap600 (SAA)
14. IQ Short Duration Enhanced Core Bond U.S. ETF (SDAG)
15. ProShares Ultra Euro ETF (ULE)
16. Columbia EM Core ex-China ETF (XCEM)

The 6 ETFs/ ETNs that were closed:

1. iShares Edge MSCI Min Vol Asia ex Japan ETF (AXJV)
2. CWA Income ETF (CWAI)
3. iShares Adaptive Currency Hedged MSCI Japan ETF (DEWJ)
4. iShares Adaptive Currency Hedged MSCI Eurozone ETF (DEZU)
5. ProShares Ultrashort Gold Miners ETF (GDXS)
6. ProShares CDS Short North American HY Credit ETF (WYDE)

The 3 ETFs/ETNs removed from ETF Deathwatch due to improved health:

1. USCF SummerHaven SHPEI Index Fund (BUY)
2. Franklin Liberty Municipal Bond ETF (FLMB)
3. iShares Currency Hedged MSCI United Kingdom ETF (HEWU)

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