ETF Global

ETF Global – ETP Liquidation Watch

Background:  Unlike some other investment instruments, a key risk when investing in ETPs is “Liquidation Risk” – the risk of an ETP being liquidated by its sponsor.  ETP liquidation can occur for a variety of reasons and this risk has become more pervasive as ETP sponsors have flooded the market with ETPs aimed at the perceived appetite of investors.  Unfortunately, the market has often failed to absorb the supply of new ETPs (see Annual ETP Closings table below).  As an example of this saturation, of the entire universe of ETPs, approximately 21% have $10 Million or less of Assets Under Management and 12% have $5 Million or less of AUM.

Annual ETP Closings* (12/1/14)

Year

2014 

2013 

2012 

2011 

2010 

2009 

2008 

ETP Closings 

60

67 

94

30

49

56

58

                                                                                         * Funds added to list when closing is announced

“Liquidation” Watch:  As part of ETF Global’s overall risk assessment for individual ETPs, ETFG identifies those ETPs that may be in jeopardy of termination in the foreseeable future.  ETFG considers three primary factors to be the most indicative of a potential ETP liquidation:

ETFG Liquidation Watch - December 2014

Criteria #1

 

Criteria #2

 

Criteria #3

Assets Under Management < $5M

 

       ETP Age > 2 Years

 

Negative Fund Performance (ttm)

201 ETPs

 

1,319 ETPs

 

623 ETPs

 

 

Down  
 

Right

All 3 Criteria

Left

 

 

 

95 ETPs

 

 

For questions or inquiries regarding the ETF Global Liquidation Watch List or our Liquidation Watch Alerts, please call our research support desk at (412) 325-3971 or e-mail our research support team at research@etfg.com

ETFG Liquidation Watch List and History

Products on Liquidation Watch - Monthly

 Year

 January 

 February 

March

April

May

June

July

August

 September 

 October 

 November 

 December

  2013

    39

    37 

   45

    43

    64

     71

     73

    73

       67

     56

       66

      72

  2014

    89

    91

   98

    80

    74

     68

     50

    59

       68

     88

      100

      95

 

 

 

 

20142013