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ETF Deathwatch For April 2016: 35 Names Added

A whopping 35 ETFs and ETNs joined ETF Deathwatch this month. However, seven came off the list thanks to improved health, and another 11 exited due to their demise and liquidation. The net increase of 17 products pushes the count to an all-time high of 435. Despite the 585 lifetime product closures, 25 of which have occurred this year, the quantity of funds in jeopardy of increasing the death toll continues to grow. The primary reason is that all of the major investment categories are covered. New products coming to market tend to target a narrow niche, or they add a small twist to an existing strategy in an effort to be unique. Most of the 35 products joining the list fit into one of these descriptions. Even though the 331 ETFs on Deathwatch account for 76% of the 435 total, ETNs continue to have the highest representation. There are 204 ETNs listed for trading and 104 are on Deathwatch. That is more than half. Ten years ago, when ETNs first arrived on the scene, they offered exposure to many market segments that ETFs were avoiding. However, ETF offerings continue to evolve and have been encroaching on territories that were once the domain of ETNs. Today, most successful ETNs target MLPs, VIX futures, leveraged commodity futures, leveraged dividend plays or they are customized products for specific asset managers. There are only 33 ETNs with asset levels above $100 million. Actively managed ETFs also have above-average representation with 39 of the 136 (28.7%) actively managed funds finding themselves on Deathwatch. The 145 smart-beta funds on this list equates to 24.4% of that group. Traditional capitalization-weighted index ETFs appear to have the best chance of survival with just 15.8% of them currently in jeopardy. Combined, the 331 ETFs in these three ETF segments says that one in every five (20%) ETFs is on Deathwatch. The average asset level of products on ETF Deathwatch increased from $6.2 million to $6.6 million, and the quantity of products with less than $2 million inched higher from 97 to 98. The average age decreased from 46.6 to 46.4 months, and the number of products more than five years old increased from 138 to 148. The fact that sponsors have continued to subsidize 148 unprofitable funds for more than five years indicates they are either extremely patient or in denial. ETF Deathwatch is not just about closure risk. Liquidity risk should be a primary concern if you are considering any of these funds. On the last day of March, 277 ETFs posted zero volume, and 23 went the entire month without a single trade. Being lucky enough to get your purchase order filled within a reasonable bid/ask spread is one thing. Finding a buyer when you are ready to sell can be quite another. The 35 ETFs and ETNs added to ETF Deathwatch for April Cambria Value and Momentum (NYSEARCA: VAMO ) DB Agriculture Double Long ETN (NYSEARCA: DAG ) Direxion Daily Cyber Security Bear 2x (NYSEARCA: HAKD ) Direxion Daily Cyber Security Bull 2x (NYSEARCA: HAKK ) Direxion Daily Pharmaceutical & Medical Bear 2x (PILS) Direxion Daily Pharmaceutical & Medical Bull 2x (PILL) Direxion S&P 500 RC Volatility Response (NYSEARCA: VSPY ) EGShares EM Core ex-China (NYSEARCA: XCEM ) First Trust China AlphaDEX (NASDAQ: FCA ) First Trust Strategic Income (NASDAQ: FDIV ) First Trust Taiwan AlphaDEX (NASDAQ: FTW ) FlexShares Credit-Scored US Long Corp Bond (NASDAQ: LKOR ) FlexShares US Quality Large Cap (NASDAQ: QLC ) iPath S&P 500 Dynamic VIX ETN (NYSEARCA: XVZ ) IQ Hedge Strategy Macro Tracker (NYSEARCA: MCRO ) IQ Leaders GTAA Tracker (NYSEARCA: QGTA ) iShares Currency Hedged International High Yield Bond (NYSEARCA: HHYX ) iShares MSCI Saudi Arabia Capped (NYSEARCA: KSA ) John Hancock Multifactor Consumer Discretionary (NYSEARCA: JHMC ) John Hancock Multifactor Financials (NYSEARCA: JHMF ) John Hancock Multifactor Mid Cap (NYSEARCA: JHMM ) John Hancock Multifactor Technology (NYSEARCA: JHMT ) KraneShares Bosera MSCI China A (NYSEARCA: KBA ) ProShares Hedged FTSE Japan (NYSEARCA: HGJP ) ProShares MSCI Europe Dividend Growers (NYSEARCA: EUDV ) ProShares S&P 500 Ex-Financials (NYSEARCA: SPXN ) ProShares S&P 500 Ex-Health Care (NYSEARCA: SPXV ) ProShares S&P 500 Ex-Technology (NYSEARCA: SPXT ) PureFunds ISE Mobile Payments ( IPAY ) Recon Capital DAX Germany (NASDAQ: DAX ) Renaissance IPO (NYSEARCA: IPO ) SPDR S&P International Dividend Currency Hedged (NYSEARCA: HDWX ) SPDR MSCI International Real Estate Currency Hedged (NYSEARCA: HREX ) WisdomTree Global Natural Resources (NYSEARCA: GNAT ) WisdomTree Middle East Dividend (NASDAQ: GULF ) The 7 ETPs removed from ETF Deathwatch due to improved health: AdvisorShares Madrona International (NYSEARCA: FWDI ) AdvisorShares WCM/BNY Mellon Focused Growth ADR (NYSEARCA: AADR ) ALPS Emerging Sector Dividend Dogs (NYSEARCA: EDOG ) iPath Pure Beta Crude Oil ETN (NYSEARCA: OLEM ) ProShares S&P MidCap 400 Dividend Aristocrats (NYSEARCA: REGL ) ProShares Short Basic Materials (NYSEARCA: SBM ) ValueShares International Quantitative Value (BATS: IVAL ) The 11 ETFs removed from ETF Deathwatch due to delisting: ETFS Physical White Metal Basket Shares (NYSEARCA: WITE ) Recon Capital FTSE 100 (NASDAQ: UK ) PowerShares China A-Share (NYSEARCA: CHNA ) PowerShares Fundamental Emerging Markets Local Debt (NYSEARCA: PFEM ) PowerShares KBW Insurance (NYSEARCA: KBWI ) Direxion Value Line Conservative Equity (NYSEARCA: VLLV ) Direxion Value Line Mid- and Large-Cap High Dividend (NYSEARCA: VLML ) Direxion Value Line Small- and Mid-Cap High Dividend (NYSEARCA: VLSM ) ALPS Sector Leaders (NYSEARCA: SLDR ) ALPS Sector Low Volatility (NYSEARCA: SLOW ) ALPS STOXX Europe 600 (NYSEARCA: STXX ) ETF Deathwatch Archives Disclosure: Author has no positions in any of the securities mentioned and no positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) is received from, or on behalf of, any of the companies or ETF sponsors mentioned.

Emerging Markets Back On Track: 5 Outperforming ETFs

Emerging markets, which were the worst hit by slowing economic growth, China turmoil and the prospect of higher interest rates in the U.S., seem to have been rebounding in recent weeks. This is especially true as the two most popular ETFs – the iShares MSCI Emerging Markets ETF (NYSEARCA: EEM ) and the Vanguard FTSE Emerging Markets ETF (NYSEARCA: VWO ) – climbed over 5% in the past five days against gains of 3.4% for the iShares MSCI ACWI ETF (NASDAQ: ACWI ) and 3% for the SPDR S&P 500 ETF (NYSEARCA: SPY ) , suggesting that the worst might be over. Impressive gains came on the back of stabilization in commodity prices, hopes of additional stimulus from central banks from Asia to Europe, and China’s latest step to arrest the slowdown that led to some gains in emerging market currencies. Additionally, investors’ lack of hope for a rate hike anytime soon fueled the rally in the stocks. Further, data from the Institute of International Finance, which showed that capital flows into emerging markets turned flat in February after seven straight months of outflows, injected fresh optimism into the emerging markets. Notably, net emerging market outflows decreased to $200 million last month, with Latin America pulling in the maximum capital of $2.7 billion, followed by inflows of $1.7 billion in Africa and the Middle East, $1.5 billion in Europe and $300 million in Asia. Apart from positive developments, low valuations made these stocks tempting. As a result, several emerging market ETFs performed remarkably well over the past five days. Of those, we have highlighted the ones that emerged as the true winners of this short-covering rally. PowerShares FTSE RAFI Emerging Markets Portfolio ETF (NYSEARCA: PXH ) – Up 6.4% This ETF follows the FTSE RAFI Emerging Markets Index and offers exposure to the largest emerging market stocks based on four fundamental measures – book value, cash flow, sales and dividends. Holding 336 securities in its basket, the fund allocates no more than 3.4% in a single security. Financials (31%) and energy (22.6%) take the top two spots. In terms of country holdings, about one-fourth of the portfolio goes to Chinese firms while Taiwan, Brazil, and Russia round off the next three spots with a double-digit exposure each. The fund has amassed $282.1 million in its asset base, and trades in a good volume of around 265,000 shares a day. It charges 49 bps in annual fees from investors and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook. iShares MSCI BRIC ETF (NYSEARCA: BKF ) – Up 5.7% This fund targets the four BRIC countries with highest exposure of 57.1% in China, 19.6% in India, 13.7% in Brazil and the rest in Russia. It tracks the MSCI BRIC Index and holds 308 stocks in its portfolio. However, it is skewed towards the top firm – Tencent Holdings ( OTCPK:TCEHY ) – at 6.82%. Other firms hold no more than 4.84% of assets. In terms of sector exposure, financials dominates the fund return with 30% of the portfolio, followed by information technology (18.4%) and energy (12.4%). The fund has accumulated $154.9 million in AUM and trades at a lower volume of 21,000 shares per day on average. It charges 72 bps in expense ratio and has a Zacks ETF Rank of 4 or ‘Sell’ rating with a Medium risk outlook. EGShares Emerging Market Consumer ETF (NYSEARCA: ECON ) – Up 5.5% This ETF targets the consumer sector of the emerging markets by tracking the Dow Jones Emerging Markets Consumer Titans 30 Index. It holds 30 stocks in its basket with heavy concentration on the top firm – Naspers ( OTCPK:NPSNY ) – at 10.3%. The other firms hold less than 5.7% share. From a country look, South Africa occupies the top position with one-fourth of the portfolio while China and Mexico round off the top three with over 16% share. The fund has amassed $549.6 million in its asset base and sees solid average trading volume of more than 352,000 shares. The expense ratio comes in at 0.83%. Schwab Emerging Markets ETF (NYSEARCA: SCHE ) – Up 5.5% This fund tracks the FTSE Emerging Index, holding 776 stocks in its basket. None of the securities accounts for more than 4% of total assets. The product is slightly tilted towards financials at 25%, closely followed by technology (14%) and energy (8%). Here again, China takes the top spot at 26.5% while Taiwan and India receive a double-digit allocation each. SCHE is one of the popular and liquid options in the emerging market space with AUM of $1.5 billion and average daily volume of 848,000 shares. It charges 14 bps in fees per year from investors and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook. First Trust Emerging Markets Small Cap AlphaDEX ETF (NYSEARCA: FEMS ) – Up 5.5% This fund follows the NASDAQ AlphaDEX Emerging Markets Small Cap Index and targets the small cap segment of the emerging market space. Holding 206 securities, the fund is well spread out across each component as each security holds less than 1.5% share. Taiwanese firms take the top spot at nearly 24.2%, closely followed by China (18.2%) and Brazil (12.4%). From a sector look, about one-fifth of the portfolio is allocated to information technology while financials, industrials, and consumer discretionary round off the next three spots with a double-digit allocation each. The product is often overlooked by investors, as depicted by AUM of $36.3 million and average daily volume of roughly 22,000 shares. The expense ratio comes in higher at 0.80%. Original Post