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 list shrank in February. Five exchange-traded products (“ETPs”) were added to the list, and 24 funds were removed. All 24 of those removals were due to increased health, which is no surprise given the strong performance of the S&P 500 Index and the Dow Jones Industrial Average in February. There were no fund closures last month.

Various niche products were added to the Deathwatch last month. All were added because they had a low average daily volume for the past three months. These additions 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. The additions to the Deathwatch were either actively managed funds built for capital preservation or other types of niche products. The rally in the major indexes over the past few months may have caused investors to avoid these products in favor of higher-risk options or funds that track the major indexes.

A wide variety of funds were removed from the Deathwatch due to improved health. With the number of new COVID cases decreasing, more people being vaccinated, and many economic indicators pointing toward a strong economic outlook, it makes sense that so many ETFs have seen an uptick in volume and AUM.

Forty ETFs and exchange-traded notes (“ETNs”) on Deathwatch this month 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 clients interested in active management.

The average asset level of the threatened ETFs on ETF Deathwatch increased from $9.29 million to $9.56 million, and 22 products had less than $2 million in assets. The average age of products on the list increased from 55.21 to 55.78, and the number of products more than 5 years of age decreased from 109 to 104. The largest ETF on the list had an AUM of $24.90 million, while the smallest had assets of just $526,530.

Here is the Complete List of 320 ETFs and ETNs on ETF Deathwatch for February 2021 compiled using the objective ETF Deathwatch Criteria.

The 5 ETFs/ETNs added to ETF Deathwatch in February:

  1. AAF First Priority CLO Bond ETF (AAA)
  2. TrueShares Structured Outcome August ETF (AUGZ)
  3. Invesco S&P International Developed Momentum ETF (IDMO)
  4. ETRACS NYSE Pickens Core Midstream Index ETN (PYPE)
  5. TrueShares Structured Outcome September ETF (SEPZ)

The 24 ETFs/ETNs removed from ETF Deathwatch due to improved health:

  1. BMO Elkhorn DWA MLP Select Index ETN (BMLP)
  2. Invesco BulletShares 2022 USD Emerging Markets Debt ETF (BSBE)
  3. Invesco BulletShares 2023 USD Emerging Markets Debt ETF (BSCE)
  4. Invesco BulletShares 2023 Municipal Bond ETF (BSMN)
  5. First Trust TCW Securitized Plus ETF (DEED)
  6. Franklin FTSE Asia ex Japan ETF (FLAX)
  7. Franklin FTSE Taiwan ETF (FLTW)
  8. US Equity Cumulative Dividends Fund-Series 2027 (IDIV)
  9. KraneShares MSCI Emerging Markets ex China Index ETF (KEMX)
  10. Morgan Stanley Cushing MLP High Income Index ETN (MLPY)
  11. ProShares Merger ETF (MRGR)
  12. Global X MSCI China Communication Services ETF (CHIC)
  13. AdvisorShares Focused Equity ETF (CWS)
  14. Innovation Shares NextGen Vehicles & Technology ETF (EKAR)
  15. First Trust Indxx Global Natural Resources Income ETF (FTRI)
  16. iShares MSCI Colombia ETF (ICOL)
  17. iShares Evolved US Media and Entertainment ETF (IEME)
  18. Franklin Intelligent Machines ETF (IQM)
  19. KraneShares Emerging Markets Healthcare Index ETF (KMED)
  20. SmartETFs Smart Transportation & Technology ETF (MOTO)
  21. VanEck Vectors Uranium+Nuclear Energy ETF (NLR)
  22. Invesco PureBeta MSCI USA Small Cap ETF (PBSM)
  23. Sofi Next 500 ETF (SFYX)
  24. Tortoise Digital Payments Infrastructure Fund (TPAY)

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