ETF Deathwatch For May 2019


By Ansh Chaudhary

For the month of May, the ETF Deathwatch increased in size. Twenty-nine exchange-traded products (“ETPs”) were added to the list, and 19 funds were removed, making May a busier month in terms of additions. Of the removals, 16 were removed due to increased health and three were removed due to asset managers closing their funds.

May was a weak month for global equity markets, so the number of funds added to the Deathwatch in May is not surprising. Most of the additions were index-tracking ETFs. This may be due to the underperformance of broad global markets in May.

For May, the additions were mostly equity ETFs from the U.S. There were a few equity indexes from international markets as well. Of the additions this month, two funds were added because their 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 May could be due to the market correction. Investors may have been waiting for a better time to buy or sell these assets.

The addition of 18 sector-specific or broad-indexed ETFs that track equities in the past month coincides with how the broad market has performed recently. Equities have been reacting to increasing trade tensions between the U.S. and China and fears of global economic slowdown for months. As money managers begin to allocate to safer investments, the average daily trading volume in equity-index ETFs is bound to decline. It is possible these funds will be on Deathwatch only temporarily during this time of increased market volatility when investors are more cautious. The three funds that closed last month were strategically managed, niche equity products, hence their closures do not come as a surprise. During May’s volatile trading period, the fund managers could have concluded these funds were underperforming significantly or that their AUM was too low to continue operating the funds.

There are 40 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 decreased from $7.55 million to $7.45 million, and 41 products had less than $2 million in assets. The average age of products on the list increased from 46.33 months to 47.54 months, and the number of products more than five years of age increased from 107 to 112. The largest ETF on the list had an AUM of $24.16 million, while the smallest had assets of just $458,590.

Here is the Complete List of 442 ETFs and ETNs on ETF Deathwatch for May 2019 compiled using the objective ETF Deathwatch Criteria.

  1. The 29 ETF/ETNs added to ETF Deathwatch for May:
  2. First Trust NASDAQ Global Auto Index Fund (NASDAQ:CARZ)
  5. VanEck Vectors Emerging Markets Aggregate Bond ETF (NYSEARCA:EMAG)
  6. First Trust Canada AlphaDEX Fund (NASDAQ:FCAN)
  7. Franklin FTSE Europe Hedged ETF (NYSEARCA:FLEH)
  8. First Trust Global Engineering and Construction ETF (NYSEARCA:FLM)
  9. Franklin LibertyQ US Small Cap Equity ETF (NYSE:FLQS)
  10. First Trust Short Dur Manag (NYSEARCA:FSMB)
  11. First Trust Exchange-Traded Fund VI First Trust Hedged BuyWrite Income ETF (NASDAQ:FTLB)
  12. Gadsden Dynamic Multi-Asset (NYSEARCA:GDMA)
  13. X-trackers High Yield Corp Bond-Interest Rate Hedged ETF (NYSE:HYIH)
  14. Direxion Daily Consumer-ETF (NYSEARCA:LACK)
  15. Columbia Multi-Sector Municipal Income ETF (NYSEARCA:MUST)
  16. Direxion Dly Cons Staples Bu (NYSEARCA:NEED)
  17. Direxion Dly Cons Disc 3x Br (NYSEARCA:PASS)
  18. PGIM QMA Strategic Alpha SMA (NYSEARCA:PQSG)
  19. PGIM QMA Strategic Alpha SMA (NYSEARCA:PQSV)
  20. Principal Shareholder Yield Index ETF (NASDAQ:PY)
  21. IQ Hedge Market Neutral Tracker ETF (NYSEARCA:QMN)
  22. Defiance Quantum ETF (NYSEARCA:QTUM)
  23. ProShares RAFI Long/Short (NYSEARCA:RALS)
  24. Large Cap US Equity Select ETF (NASDAQ:RNLC)
  25. Hartford Multifactor Global Small Cap ETF (NYSEARCA:ROGS)
  26. TigerShares China-US Interne (NASDAQ:TTTN)
  27. First Trust Total US Market AlphaDEX ETF (NASDAQ:TUSA)
  28. SPDR S&P 1500 Value Tilt ETF (NYSEARCA:VLU)
  29. Direxion Daily Consumer Bull (NYSEARCA:WANT)
  30. SPDR Solactive Canada ETF (NYSEARCA:ZCAN)

The 16 ETF/ETNs removed from ETF Deathwatch due to improved health:

  1. WisdomTree Dynamic Currency Hedged International Quality Dividend Growth Fund (NYSE:DHDG)
  2. Invesco Strategic Developed ex-US ETF (NASDAQ:ISDX)
  3. Invesco PureBeta US Aggregate Bond ETF (NYSE:PBND)
  4. American Century STOXX US Quality Value ETF (NYSEARCA:VALQ)
  5. iPath Series B Bloomberg Livestock Subindex Total Return ETN (NYSEARCA:COW)
  6. First Trust China AlphaDEX Fund (NASDAQ:FCA)
  7. Fidelity International Value Factor ETF (NYSEARCA:FIVA)
  8. Franklin FTSE Australia ETF (NYSEARCA:FLAU)
  9. Franklin FTSE Asia ex Japan ETF (NYSEARCA:FLAX)
  10. Invesco Investment Grade Defensive ETF (NYSEARCA:IIGD)
  11. Invesco Investment Grade Value ETF (NYSEARCA:IIGV)
  12. iShares 5-10 Year Investment Grade Corporate Bond ETF (NYSE:MLQD)
  13. ETRACS Monthly Pay 2xLeveraged S&P Dividend ETN (NYSEARCA:SDYL)
  14. Pacer CFRA-Stovall Equal Weight Seasonal Rotation Index ETF (NYSEARCA:SZNE)
  15. ProShares Ultra FTSE Europe (NYSEARCA:UPV)
  16. Direxion Daily Utilities Bull 3x Shares (NYSEARCA:UTSL)

The 3 ETFs/ ETN that were closed:

  1. QuantX Risk Managed Multi-Asset Total Return ETF (NYSE:QXTR)
  3. QuantX Dynamic Beta US Equity ETF (NYSE:XUSA)

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

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