Boston-based ETF issuer O’Shares Investments has announced the closing of two ETFs which provide currency-hedged exposure to high quality dividend-paying equities listed in Europe and Asia Pacific.
Connor O’Brien, CEO of O’Shares.
Connor O’Brien, CEO of O’Shares, commented: “We have had limited demand for our currency hedged ETFs investing in Europe and Asia. Due to the small size and limited demand for these products, the decision has been made to close the funds, so we can direct resources to developing new O’Shares ETFs to meet investors’ demand for different strategies.”
The O’Shares FTSE Europe Quality Dividend Hedged ETF (OEUH US) and O’Shares FTSE Asia Pacific Quality Dividend Hedged ETF (OAPH US) will cease trading on the NYSE Arca on 30 November 2017. The funds will not accept creation unit orders from authorized participants after this date.
The ETFs track indices from the FTSE Global Factor Index Series which select constituents based on three factors: quality, low volatility and dividend yield. According to O’Shares, the quality and low volatility requirements are designed to potentially reduce exposure to high-dividend equities that have experienced large price declines, as may occur with some dividend investing strategies. Additionally, the funds hedge their currency exposures relative to the US dollar.
Investors should note that O’Shares is only closing the currency-hedged versions of these funds; the O’Shares FTSE Europe Quality Dividend ETF (OEUR US) and O’Shares FTSE Asia Pacific Quality Dividend ETF (OASI US) – providing exposure to the same underlying strategies but without currency hedging – will remain open. OEUR and OASI have AUM of $65m and $12m respectively. Each has a total expense ratio (TER) of 0.58%.
Following the cessation of trading in the funds scheduled for closure, on 8 December 2017, the ETFs will undertake the process of closing down and liquidating their respective portfolios. This will result in the funds increasing their cash holdings and not replicating their underlying indices.
On or about 12 December 2017, shareholders who have not sold their holdings will receive cash equal to the amount of the net asset value of their shares as of the liquidation date, including the costs of liquidating the portfolio. These distributions may be taxable and will include any accrued capital gains and dividends.
The full suite of O’Shares quality dividend ETFs includes funds targeting US large-caps, US small-caps, and broad international equities. The blockbuster in the range is the O’Shares FTSE US Quality Dividend ETF (OUSA US) which has $420m in AUM, while the O’Shares FTSE Russell US Small Cap Quality Dividend ETF (OUSM US) and O’Shares FTSE Russell International Quality Dividend ETF (ONTL US) have AUM of $57m and $17m respectively. Each of the three ETFs has a TER of 0.48%.