Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

1st Quarter | 2022

Market insights and analysis


Updates on how dynamic, risk-managed investment solutions are performing in the current market environment.

ETF Deathwatch

The ETF Deathwatch shrank a bit in December. Thirty-one exchange-traded products (“ETPs”) were added to the list, and 34 funds were removed. Twelve of those removals were due to increased health, which is to be expected given the market rally in December. Twenty-two removals were due to asset managers closing their funds, which makes sense as 2020 was a record-setting year for fund closures.

A wide variety of products were added to the list in December, including international funds, U.S. equity products, and niche products. All were added because they had a low average daily volume for the past three months. These additions may have enough assets under management (“AUM”) to keep them from closure; however, our system takes into account both AUM and volume, so it’s likely that should volume and interest remain low, these funds may be considered for closure.

The low volume in these funds could be due to the nature of their investment product. Many of the funds on the Deathwatch list are niche, actively managed, or hedged funds. Investors and financial advisers may have steered their clients away from products such as these in favor of passively allocated strategies in major U.S. indexes. As December continued the massive rally of 2020, the market conditions may have warranted moving money to passive index-tracking ETFs.

The removals from the Deathwatch due to improved health included equity, international, and niche products, including two funds that track cannabis companies. With the recent elections favoring Democrats, investors may believe the likelihood of the federal legalization of marijuana has increased.

Forty-four ETFs and exchange-traded notes (“ETNs”) on the Deathwatch list have been in the market for more than 10 years. This is a long time for ETPs to exist while remaining on our Deathwatch list. Leveraged and short ETF instruments, as well as several commodity ETPs, dominate our list of funds older than 10 years. The fund companies managing these products may allow them to remain active, as they likely play a larger role for their clients that are interested in active management.

The average asset level of the threatened ETFs on ETF Deathwatch increased from $9.16 million to $9.54 million, and 28 products had less than $2 million in assets. The average age of products on the list decreased from 55.07 months to 53.66 months, and the number of products more than 5 years of age decreased from 113 to 110. The largest ETF on the list had an AUM of $24.99 million, while the smallest had assets of just $346,698.

Here is the Complete List of 348 ETFs and ETNs on ETF Deathwatch for December 2020 compiled using the objective ETF Deathwatch Criteria.

The 31 ETFs/ETNs added to ETF Deathwatch for December:

  1. AllianzIM US Large Cap Buffer10 Jul ETF (AZAL)
  2. AllianzIM US Large Cap Buffer20 Jul ETF (AZBL)
  3. Global X S&P Catholic Values Developed EX-US ETF (CEFA)
  5. Loncar China Biopharma ETF (CHNA)
  6. Direxion Dynamic Hedge ETF (DYHG)
  7. iShares ESG Aware Aggressive Allocation ETF (EAOA)
  8. iShares ESG Aware Conservative Allocation ETF (EAOK)
  9. iShares ESG Aware Moderate Allocation ETF (EAOM)
  10. iShares ESG Aware Growth Allocation ETF (EAOR)
  11. Invesco S&P 500 Equal Weig C (EWCO)
  12. ProShares UltraShort MSCI Japan (EWV)
  13. MicroSectors FANG Index Inverse ETN (GNAF)
  14. iPath GSCI Total Return Index ETN (GSP)
  15. John Hancock Multifactor Energy ETF (JHME)
  16. TrueShares Structured Outcome July ETF (JULZ)
  17. Agility Shares Managed Risk ETF (MRSK)
  18. Direxion Fallen Knives ETF (NIFE)
  19. O'Shares FTSE Europe Quality Dividend ETF (OEUR)
  20. Pacer Lunt Large Cap Multi-Factor Alternator ETF (PALC)
  21. Pacer Lunt MidCap Multi-Factor Alternator ETF (PAMC)
  22. Global X Variable Rate Preferred ETF (PFFV)
  23. Principal Spectrum Tax-Advantaged Dividend Active ETF (PQDI)
  24. Principal Shareholder Yield Index ETF (PY)
  25. IQ Hedge Market Neutral Tracker ETF (QMN)
  26. VanEck Vectors ETF Trust-VanEck Vectors Real Asset Allocation ETF (RAAX)
  28. Developed International Equity Select ETF (RNDM)
  29. iPath Series B Bloomberg Sugar Subindex Total Return ETN (SGG)
  30. Siren Large Cap Blend Index ETF (SPQQ)
  31. Pacer Biothreat ETF (VIRS)

The 12 ETFs/ETNs removed from ETF Deathwatch due to improved health:

  1. Xtrackers MSCI All China Equity ETF (CN)
  2. Amplify Seymour Cannabis ETF (CNBS)
  3. First Trust DorseyWright DALI 1 ETF (DALI)
  4. LibertyQ Global Dividend ETF (FLQD)
  5. Freedom 100 Emerging Markets ETF (FRDM)
  6. Cambria Foreign Shareholder Yield ETF (FYLD)
  7. Invesco S&P SmallCap Quality ETF (XSHQ)
  8. ETFS Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (BCD)
  9. Franklin Genomic Advancements ETF (HELX)
  10. MicroSectors Cannabis 2X Leveraged ETN (MJO)
  11. Global X MSCI Portugal ETF (PGAL)
  12. Innovator S&P 500 Ultra Buffer ETF - November (UNOV)

The 22 ETFs/ETNs that were closed:

  1. ETRACS 2xMonthly Leveraged Wells Fargo Diversified BDC Index ETN Series B (BDCY)
  2. MicroSectors US Big Banks Index 2X Leveraged ETN (BNKO)
  3. MicroSectors US Big Banks Index -2X Inverse Leveraged ETN (BNKZ)
  4. iPath Series B US Treasury 10-year Bear ETN (BTYS)
  5. AGFiQ US Market Neutral Value Fund (CHEP)
  6. ETRACS Bloomberg Commodity Index Total Return ETN (DJCI)
  7. Barclays ETN+ FI Enhanced Europe 50 Exchange Traded Notes Series C (FFEU)
  8. Barclays ETN+ FI Enhanced Europe 50 ETN Series B (FLEU)
  9. First Trust Mega Cap AlphaDEX Fund (FMK)
  10. ETRACS CMCI Food Total Return ETN (FUD)
  11. Sage ESG Intermediate Credit ETF (GUDB)
  12. MicroSectors US Big Banks Index Inverse ETN (KNAB)
  13. ETRACS Monthly Pay 2xLeveraged Wells Fargo MLP Ex-Energy ETN Series B (LMLB)
  14. Natixis Seeyond International Minimum Volatility ETF (MVIN)
  15. MicroSectors US Big Oil Index 2X Leveraged ETNs (NRGO)
  16. Principal US Large-Cap Multi-Factor Core Index ETF (PLC)
  17. Principal US Small-MidCap Multi-Factor Core Index ETF (PSM)
  18. Barclays Inverse US Treasury Composite ETN (TAPR)
  19. ETRACS CMCI Agriculture Total Return ETN (UAG)
  20. ETRACS CMCI Gold Total Return ETN (UBG)
  21. ETRACS CMCI Total Return ETN (UCI)
  22. ETRACS CMCI Silver Total Return ETN (USV)

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