The ETF Deathwatch list increased in September. Twenty-five exchange-traded products (“ETPs”) were added to the list and 12 funds were removed.
Of the removals, 10 were removed due to increased health and two were due to asset managers closing their funds. September was a fairly sideways period in the equity markets, so the increase in the number of funds on the ETF Deathwatch list doesn’t come as a surprise.
The funds added in September consisted of index-tracking equity ETFs, with a mix of leveraged, small-cap, and international funds. One fund was added because its assets under management (AUM) were 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 could be due to increased market volatility in response to current events and economic indicators. 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. Trade negotiations between China and the U.S. haven’t progressed, and the U.S. has imposed new tariffs on Europe. Economic data is also pointing toward a global slowdown: Germany appears to be on the verge of a recession, and manufacturing(NYSEARCA:XLI) in the U.S. is slowing down. Given this environment, it makes sense that investors have been staying away from leveraged and international products at this time. As money managers allocate to safer holdings, the average daily trading volume in equity-index ETFs is bound to decline.
Fifty-one ETFs and ETNs on Deathwatch this month 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 (NYSEARCA:DBC) 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 may play a larger role for clients interested in active management.
The average asset level of the threatened ETFs on ETF Deathwatch increased from $7.61 million to $7.97 million, and 55 products had less than $2 million in assets. The average age of products on the list decreased from 49.86 to 49.57, and the number of products more than 5 years of age increased from 126 to 129. The largest ETF on the list had an AUM of $24.93 million, while the smallest had assets of just $483,278.
Here is the Complete List of 481 ETFs and ETNs on ETF Deathwatch for September 2019 compiled using the objective ETF Deathwatch Criteria.
The 25 ETFs/ETNs added to ETF Deathwatch for September:
- Virtus Newfleet Dynamic Credit ETF (BLHY)
- MicroSectors US Big Banks Index -3X Inverse Leveraged ETN (BNKD)
- MicroSectors US Big Banks Index -2X Inverse Leveraged ETN (BNKZ)
- Global X MSCI China Communication Services ETF (CHIC)
- iShares MSCI Japan Equal Weighted ETF (EWJE)
- iShares MSCI Japan Value ETF (EWJV)
- First Trust Dow Jones Intl (FDNI)
- Franklin LibertyQ Global Equity ETF (FLQG)
- First Trust Nasdaq Oil & Gas ETF (FTXN)
- Goldman Sachs Motif New Age Consumer ETF (GBUY)
- Goldman Sachs Motif Human Evolution ETF (GDNA)
- Goldman Sachs Motif Manufacturing Revolution ETF (GMAN)
- Hoya Capital Housing ETF (HOMZ)
- WisdomTree India EX-State-Owned Enterprises Fund (IXSE)
- John Hancock Multifactor Media and Communications ETF (JHCS)
- MicroSectors US Big Banks Index Inverse ETN (KNAB)
- Salt Low Trubeta US Market ETF (LSLT)
- ETRACS 2xMonthly Leveraged S&P MLP Index ETN Series B (MLPZ)
- Invesco S&P SmallCap Materials ETF (PSCM)
- Direxion Russell Small/Large (RWSL)
- WisdomTree Fundamental US Short-Term High Yield Corporate Bond Fund (SFHY)
- Direxion Daily Transportation Bull 3x Shares (TPOR)
- Innovator S&P 500 Ultra ETF April (UAPR)
- ProShares Ultra Industrials (UXI)
- Invesco Russell MidCap Equal Weight ETF (XMHQ)
The 2 ETFs/ ETN that were closed:
- AdvisorShares Sabretooth ETF (BKCH)
- First Trust Heitman Global Prime Real Estate ETF (PRME)
The 10 ETF/ETNs removed from ETF Deathwatch due to improved health:
- Franklin Liberty High Yield Corporate ETF (FLHY)
- Franklin Liberty US Low Volatility ETF (FLLV)
- Invesco Strategic US Small Company ETF (IUSS)
- JPMorgan Long/Short ETF (JPLS)
- WisdomTree 90/60 US Balanced Fund (NTSX)
- O’Shares FTSE Europe Quality Dividend ETF (OEUR)
- Reaves Utilities ETF (UTES)
- iPath Series B Bloomberg Cotton Subindex Total Return ETN (BAL)
- Global X Autonomous & Electric Vehicles ETF (DRIV)
- First Trust Short Dur Manag (FSMB)