ETF Deathwatch for May 2020

The ETF Deathwatch decreased in size in May. Sixteen exchange-traded products (“ETPs”) were added to the list, and 32 funds were removed. Twenty-one of those funds were removed due to increased health and 11 were due to asset managers closing their funds. That so many funds were removed from the Deathwatch in May was no surprise, considering the strong performance of the major U.S. indexes for the month.

The funds added to the list in May were a mix of niche products, most of which were actively managed strategies or inverse funds. Two were added because they had low assets under management (“AUM”) for three consecutive months. The rest were added because they had a low average daily volume for the past three months. 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 the nature of their investment product. Many funds on the Deathwatch list are niche products, which makes sense given the current environment. Equity markets rallied significantly in May as states started easing restrictions on the COVID-19 lockdowns and investors gained optimism. People prefer to be in passively managed funds during these types of periods, which explains the addition of niche products such as Active Factor ETFs. Several inverse and leveraged funds were also added, as investors likely exited short and inverse positions to make bullish trades.

Most of the removals from the Deathwatch due to improved health were index-tracking funds, with a variety of sectors and global markets. The removal of index-tracking ETFs makes sense given the market’s continued rally from April to May. Investors started to become a bit more confident in May as lockdowns eased, new daily COVID-19 cases decreased, and fewer weekly jobless claims were made.

Forty-four 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 several commodity ETPs, dominate our list of funds older than 10 years. The fund companies managing these products may 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 slightly from $6.82 million to $6.85 million, and 58 products had less than $2 million in assets. The average age of products on the list decreased from 53.89 months to 52.16 months, and the number of products more than 5 years of age decreased from 116 to 109. The largest ETF on the list had an AUM of $23.73 million, while the smallest had assets of just $363,200.

Here is the Complete List of 369 ETFs and ETNs on ETF Deathwatch for May 2020 compiled using the objective ETF Deathwatch Criteria.

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

  1. First Trust Active Factor Large Cap ETF (AFLG)
  2. First Trust Active Factor Mid Cap ETF (AFMC)
  3. First Trust Active Factor Small Cap ETF (AFSM)
  4. MicroSectors US Big Banks Index -2X Inverse Leveraged ETN (BNKZ)
  5. iShares MSCI Japan Value ETF (EWJV)
  6. LibertyQ Global Dividend ETF (FLQD)
  7. MicroSectors FANG Index 2X Inverse Leveraged ETN (FNGZ)
  8. Global X Thematic Growth ETF (GXTG)
  9. iPath S&P MLP ETN (IMLP)
  10. Invesco Strategic Emerging Markets ETF (ISEM)
  11. MicroSectors US Big Banks Index Inverse ETN (KNAB)
  12. Credit Suisse S&P MLP Index ETN (MLPO)
  13. SmartETFs Smart Transportation & Technology ETF (MOTO)
  14. AAM Low Duration Preferred and Income Securities ETF (PFLD)
  15. Small Cap US Equity Select ETF (RNSC)
  16. ProShares Ultra MSCI Brazil Capped (UBR)

 The 11 ETFs/ETNs that were closed:

  1. X-Trackers Emerging Markets Bond-Interest Rate Hedged ETF (EMIH)
  2. WisdomTree Trust-WisdomTree Dynamic Currency Hedged Europe Equity Fund (EUMF)
  3. WisdomTree YL EHD GBL AGG BD (GLBY)
  4. X-Trackers High Yield Corp Bond-Interest Rate Hedged ETF (HYIH)
  5. X-Trackers Investment Grade Bond-Interest Rate Hedged ETF (IGIH)
  6. WisdomTree Trust-WisdomTree Dynamic Currency Hedged Japan Equity Fund (JNMF)
  7. Legg Mason Emerging Markets Low Volatility High Dividend ETF (LVHE)
  8. Pacer Funds Trust-Pacer Benchmark Retail Real Estate Sctr ETF (RTL)
  9. RYZZ Managed Futures Strategy Plus ETF (RYZZ)
  10. Validea Market Legends ETF (VALX)
  11. SPDR S&P Technology Hardware ETF (XTH)

 The 21 ETFs/ETNs removed from ETF Deathwatch due to improved health:

  1. ERShares Non-US SmallCap ETF (ERSX)
  2. Pacific Global Focused High Yield ETF (FJNK)
  3. John Hancock Multifactor Media and Communications ETF (JHCS)
  4. Principal Shareholder Yield Index ETF (PY)
  5. Invesco Russell MidCap Equal Weight ETF (XMHQ)
  6. WisdomTree Emerging Currency Strategy Fund (CEW)
  7. Franklin FTSE Asia ex Japan ETF (FLAX)
  8. Franklin FTSE South Korea ETF (FLKR)
  9. First Trust Nasdaq Pharmaceuticals ETF (FTXH)
  10. First Trust Nasdaq Oil & Gas ETF (FTXN)
  11. iShares Evolved US Innovative Healthcare ETF (IEIH)
  12. iShares US Infrastructure ETF (IFRA)
  13. iPath Series B Bloomberg Grains Subindex Total Return ETN (JJG)
  14. JPMorgan Diversified Return Europe Equity ETF (JPEU)
  15. Invesco S&P SmallCap Consumer Discretionary ETF (PSCD)
  16. ProShares Short SmallCap600 (SBB)
  17. ProShares UltraShort SmallCap600 (SDD)
  18. SPDR Kensho Intelligent Structures ETF (SIMS)
  19. ProShares UltraPro Short MidCap400 (SMDD)
  20. Direxion Daily Transportation Bull 3x Shares (TPOR)
  21. Innovator S&P 500 Ultra Buffer ETF – September (USEP)

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ETF Deathwatch for May 2020