Over the last year, 10 ETFs shut down due to cost pressures, increased competition, poor performance, and minimal take up by investors. Small scale seems to be the common denominator with the median FUM of the 10 closed ETFs being $13m.
When Stockspot selects ETFs for clients, we carefully consider their size and commercial sustainability to avoid the risk of being in an ETF which closes. When an ETF closes, investors may be forced to lock in a tax event as well as go through the time-consuming inconvenience of finding a substitute fund.
Stockspot prefers larger ETFs with at least $25 million in FUM for this very reason – because smaller products are at risk of closing due to being uncommercial. None of the Stockspot preferred ETFs we use in our portfolios has ever shutdown.
Some notable delistings over the past year:
- Blackrock re-domiciled 14 of its US listed ETFs to Australia (which saved Australian investors from completing the US tax forms and enabled dividend reinvestment plans), and as part of this simplified their offering by closing 5 global share ETFs due to failure of attracting enough assets.
- ETF Securities delisted its Australian Share ETF due to increased competition and being unable to compete on price with the likes of Vanguard (VAS), BetaShares (A200), iShares (IOZ), and SPDR (STW)
- Russell Investment Management delisted its Australian Value ETF due to limited interest in the product, resulting in a lack of take up. Vanguard and BetaShares both have value orientated ETFs with their VVLU, QOZ and QUS ETFs respectively.
Closed ETFs by closure date (March 2018-March 2019)
|ASX Code||Name||Sector||Closure Date||FUM at prior month close|
|RVL||Russell Australian Value ETF||Australian Shares (strategies)||May-18||$13.1m|
|IRU||iShares Russell 2000 ETF||Global Shares (broad market)||Jun-18||$72.3m|
|IHK||iShares MSCI Hong Kong ETF||Global Shares (broad market)||Jun-18||$14.7m|
|ISG||iShares MSCI Singapore ETF||Global Shares (broad market)||Jun-18||$8.6m|
|IBK||iShares MSCI BRIC ETF||Global Shares (broad market)||Jun-18||$36.6m|
|IXP||iShares S&P Global Telecommunications ETF||Global Shares (sectors)||Jun-18||$14.5m|
|ZGOL||ETFS Physical Gold ETF||Commodity||Jul-18||$13.5m|
|ZCNH||ETFS Physical Renminbi ETF||Currency||Aug-18||$0.1m|
|AOD||Aurora Dividend Income Trust||Australian Shares (strategies)||Sep-18||$6.8m|
|ZOZI||ETFS S&P/ASX 100 ETF||Australian Shares (broad market)||Oct-18||$9.5m|
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