This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

ETF Deathwatch: Closures Hit 300


NEW YORK ( TheStreet) -- Exchange-traded product (ETP) closure activity last week pushed the lifetime death toll to 300 and the year-to-date count to 89. Early October action from iPath, Russell and Global X resulted in 30 delistings so far this month.

If a tree falls in the forest and no one is there to hear it, does it still make a sound? If an ETF closes and no shares are there to be redeemed, does it still need to liquidate?

That second philosophical question has now been answered by two Russell ETFs. The Russell Low P/E ETF (LWPE) and Russell Small Cap Contrarian ETF (SCTR) were scheduled to have their last day of trading on Oct. 16 as part of the 25-fund mass closure of Russell indexed ETFs .

However, the final shares of LWPE were redeemed on Oct, 4 and assets went to zero. The same thing happened to SCTR on Oct. 5. Russell, in a press release , said it decided to delist them the day their assets went to zero instead of waiting until Oct. 16.

No shareholders were harmed by this spur-of-the-moment closing because there were none.

The next product to meet an early demise was the iPath Long Enhanced S&P 500 VIX Mid-Term Futures ETN II (VZZB). It triggered an early termination event on Oct. 5 when its intra-day NAV hit $10, with delisting occurring after the close on Oct. 14.

VZZB came out in July 2011 to fill the void when VZZ hit its early termination trigger . This month's second early termination makes this strategy a two-time loser. No word on whether Barclays intends to see if the third time is the charm with a VZZC ETN III rollout.

Oct. 16 was the last day of trading for the remaining 23 of the 25 Russell ETFs scheduled for closing this month. Oct. 18 was the last day of trading for four global ETFs : Global X Aluminum ETF (ALUM), Global X Auto ETF (VROM), Global X Nasdaq 400 Mid Cap ETF (QQQM) (QQQM), and Global X Nasdaq 500 ETF (QQQV).

Analysis/Opinion: In addition to the 89 closures that have already taken place, there are currently five more scheduled to come this year. That pushes the tally for 2012 to 94 and climbing, more than double the 38 ETP closures of 2011 .

The number of lifetime ETP launches in the U.S. is 1,733, of which 300 have now met their demise. That equates to a 17.3% mortality rate.

Keep in mind that there are well in excess of another 300 on ETF Deathwatch .

If sponsors decide to stop subsidizing these non-profitable products, we could be looking at an ETP survival rate of less than two-thirds.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Ron Rowland is the founder and president of Capital Cities Asset Management, a fee-based registered investment adviser in Austin, Texas. He is also the founder and publisher of Invest With An Edge and All Star Investor, where he has been providing market commentary and active investment advice since 1991. Opinions expressed in this article should not be considered personal recommendations to buy or sell any security.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs