Exchange traded funds, which have experienced explosive growth, are showing signs of zero population growth.
plans to eliminate 19 ETFs this month.
"After carefully evaluating numerous factors including shareholder considerations, length of time on the market, asset levels and the potential for future growth, we proposed closing certain portfolios that have not gained sufficient acceptance with investors," said Bruce Bond, chief executive officer of Invesco PowerShares.
Investor interest in ETFs has been concentrated on the largest, and oldest, funds. The smallest half of the group has accounted for no more than 0.5% to 1% of the total daily average dollar volume of transactions. Groups of ETFs have been disappearing in recent months, many with relatively narrow areas of investment focus.
Many of the doomed ETFs, listed below, track "RAFI" indexes, created by Robert Arnott, chairman of Research Affiliates. While most popular indexes are weighted by the market value of companies, Arnott's "fundamentally weighted" gauges use factors such as sales, cash flow, book value and dividends. Critics of RAFI note that the portfolios have produced mediocre returns.
Invesco said shareholders of record of the ETFs on the close of business on May 18 will receive cash equal to the amount of the net asset value of their shares as of May 22, which will include capital gains and dividends. Shareholders will recognize a capital gain or loss equal to the amount received for their shares.
Richard Widows is a senior financial analyst for TheStreet.com Ratings. Prior to joining TheStreet.com, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.