Two relative newcomers to the US ETF game, Russell Investments and FocusShares, have signalled their retreat, reflecting the intense competitive pressures within the US market as ETF giants iShares, SPDR and Vanguard monopolise inflows.
FocusShares, an affiliate of online broker Scottrade, has announced the liquidation of its entire ETF range due to the “inability of the funds to attract significant market interest”.
FocusShares, an affiliate of Scottrade, has announced that it will be discontinuing and liquidating the entire FocusShares range. The 15 FocusShares ETFs, which launched in March last year, had managed to accumulate only approximately $100 million in aggregate assets as of July 31, 2012, despite the firm launching a wide-reaching marketing campaign earlier this year.
In deciding their fate, “The Board considered current market conditions, the inability of the funds to attract significant market interest since their inception, and their future viability as well as prospects for growth in the funds’ assets in the foreseeable future”, according to a statement released by the company.
Their last day of trading for FocusShares funds will be Friday, August 17, 2012.
Similarly, Russell Investments, which launched its first wave of ETF products in May 2011, has announced that it is conducting a strategic review of its direct US ETF business in an effort to focus more exclusively on delivering multi-asset solutions to institutional investors, financial advisers and individuals globally.
During the strategic review, the investment management team responsible for the firm’s US ETFs will remain in place, and the products will continue to pursue their respective investment objectives. However, Russell is scaling back its dedicated US ETF team, primarily based out of the firm’s San Francisco and New York City offices.
Russell will remain the underlying index provider for many ETFs around the world, with more than $80 billion in assets under management, and will continue its partnership with each of these ETF sponsors.
Meanwhile, providing further evidence of the highly competitive nature of the global ETF industry, US-based Direxion, Europe-based Lyxor and Canada-based Horizons have all recently announced the pending closure or delisting (of secondary listings) of some of their less popular funds.
The Direxion ETFs to close are the Direxion Daily Agribusiness Bull 3X Shares (COWL), the Direxion Daily Agribusiness Bear 3X Shares (COWS), the Direxion Daily Basic Materials Bear 3X Shares (MATS), the Direxion Daily BRIC Bull 3X Shares (BRIL), the Direxion Daily BRIC Bear 3X Shares (BRIS), the Direxion Daily Healthcare Bear 3X Shares (SICK), the Direxion Daily India Bear 3X Shares (INDZ), the Direxion Daily Latin America Bear 3X Shares (LHB) and the Direxion Daily Retail Bear 3X Shares (RETS).
The Lyxor funds affected are the Lyxor ETF Wise Quantitative Strategy, the Lyxor ETF Stoxx Europe 600 Automobiles & Parts Daily Short, the Lyxor ETF Stoxx Europe 600 Banks Daily Short, the Lyxor ETF Stoxx Europe 600 Basic Resources Daily Short and the Lyxor ETF Stoxx Europe 600 Oil & Gas Daily Short. These funds will be delisted from the Borsa Italiana, while their Euronext, Deutsche Börse, and SIX Swiss Exchange listings will also be reviewed.
The Horizons funds to close are the Horizons BetaPro NYMEX Natural Gas Inverse ETF (HIN), the Horizons BetaPro NYMEX Crude Oil Inverse ETF (HIO), the Horizons BetaPro NYMEX Long Natural Gas/Short Crude Oil Spread ETF (HNO) and the Horizons BetaPro NYMEX Long Crude Oil/Short Natural Gas Spread ETF (HON).
Direxion, Horizons and Lyxor all confirmed that the closures were due to commercial reasons relating to the individual funds’ inability to attract sufficient investment assets, following low market interest. Despite the closures, however, all three providers are understood to remain fully committed to the ETF space and, indeed, have been active with multiple new product launches this year.