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.

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The ETF Deathwatch decreased in size in March. Sixteen exchange-traded products (“ETPs”) were added to the list, and 54 funds were removed. Thirty-three of those funds were removed due to increased health and 21 were due to asset managers closing their funds. The low number of additions to the Deathwatch in March comes as a surprise, considering how turbulent the month was for U.S. indexes.

The funds added to the list in March were a mix of niche and municipal bond products. All of the additions were due to low average daily volume. 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. Many of the funds added to the Deathwatch list are niche funds. Because equity markets fell sharply in March on news of the effects of COVID-19 on businesses and economies worldwide, it makes sense that some leveraged big-bank, non-U.S. small-cap, ESG large-cap, and emerging-market funds might find themselves on the list. Investors tend to avoid niche products in these areas of investing during market downturns, as they are likely to be hit much harder than other passive, index-tracking, non-niche products.

However, most of the removals from the Deathwatch due to improved health are also niche products. But after taking a closer look, we find that quite a few of these are factor ETFs—value, dividend, and so on. It makes sense that interest may increase in some of these funds during a market downturn, as they provide active downside protection when they shift to highly ranked companies while most of the market is going down. Some biopharmaceutical ETFs were also removed from the list. This makes sense as investors are betting on these companies to come up with a cure for COVID-19. It’s also possible that some of the funds removed due to improved health rode the large market rally in the last week of March, making them seem like suitable investments even if the first half of March was rough.

Forty-nine ETFs and 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 continue to allow them to remain active, as they play a larger role for their clients interested in active management.

The average asset level of the threatened ETFs on ETF Deathwatch decreased from $7.47 million to $6.35 million, and 78 products had less than $2 million in assets. The average age of products on the list increased from 52.42 months to 53.79 months, and the number of products more than 5 years of age decreased from 126 to 122. The largest ETF on the list had an AUM of $24.21 million, while the smallest had assets of just $355,740.

Here is the Complete List of 399 ETFs and ETNs on ETF Deathwatch for March 2020 compiled using the objective

The 16 ETFs/ETNs added to ETF Deathwatch for March:

  1. MicroSectors US Big Banks Index 3X Leveraged ETN (BNKU)
  2. Invesco BulletShares 2023 Municipal Bond ETF (BSMN)
  3. Invesco BulletShares 2025 Municipal Bond ETF (BSMP)
  4. Invesco BulletShares 2026 Municipal Bond ETF (BSMQ)
  5. Invesco BulletShares 2027 Municipal Bond ETF (BSMR)
  6. Invesco BulletShares 2028 Municipal Bond ETF (BSMS)
  7. Invesco BulletShares 2029 Municipal Bond ETF (BSMT)
  8. USCF SummerHaven SHPEI Index Fund (BUY)
  9. Amplify Seymour Cannabis ETF (CNBS)
  11. iPath Series B Carbon ETN (GRN)
  12. Xtrackers MSCI All World ex US High Dividend Yield Equity ETF (HDAW)
  13. Nationwide Maximum Diversification Emerging Markets Core Equity ETF (MXDE)
  14. Nuveen ESG Large-Cap ETF (NULC)
  15. Invesco Dynamic Oil & Gas Services ETF (PXJ)
  16. Invesco Russell MidCap Equal Weight ETF (XMHQ)

The 33 ETFs/ETNs removed from ETF Deathwatch due to improved health:

    1. MicroSectors US Big Banks Index -2X Inverse Leveraged ETN (BNKZ)
    2. First Trust China AlphaDEX Fund (FCA)
    3. MicroSectors US Big Banks Index Inverse ETN (KNAB)
    4. Innovator S&P 500 Power Buffer ETF June (PJUN)
    5. Small Cap US Equity Select ETF (RNSC)
    6. Innovator S&P 500 Ultra ETF April (UAPR)
    7. Innovator S&P 500 Ultra Buffer ETF June (UJUN)
    8. Vanguard U.S. Quality Factor (VFQY)
    9. Global X MSCI China Communication Services ETF (CHIC)
    12. Loncar China Biopharma ETF (CHNA)
    13. ProShares UltraShort Australian Dollar ETF (CROC)
    14. iM DBi Managed Futures Strategy ETF (DBMF)
    15. Fidelity Targeted Emerging Markets Factor ETF (FDEM)
    16. Fidelity International Value Factor ETF (FIVA)
    17. Franklin FTSE Australia ETF (FLAU)
    18. Freedom 100 Emerging Markets ETF (FRDM)
    19. Fidelity Small-Mid Factor ETF (FSMD)
    20. Goldman Sachs Motif New Age Consumer ETF (GBUY)
    21. Goldman Sachs Motif Data-Driven World ETF (GDAT)
    22. Goldman Sachs Motif Human Evolution ETF (GDNA)
    23. Goldman Sachs Motif Finance Reimagined ETF (GFIN)
    24. Hoya Capital Housing ETF (HOMZ)
    25. Invesco S&P International Developed High Dividend Low Volatility ETF (IDHD)
    26. First Trust Long Duration O-ETF (LGOV)
    27. VanEck Vectors Municipal Allocation ETF (MAAX)
    28. First Trust Municipal CEF Income Opportunity ETF (MCEF)
    29. Global X MSCI Portugal ETF (PGAL)
    30. EventShares US Policy Alpha ET (PLCY)
    31. First Trust SMID Cap Rising Dividend Achievers ETF (SDVY)
    32. Xtrackers Short Duration High Yield Bond ETF (SHYL)
    33. SPDR S&P 1500 Value Tilt ETF (VLU)

The 21 ETFs/ETNs that were closed:

    1. Market Vectors Renminbi/USD ETN (CNY)
    2. iPath US Treasury Long Bond Bear ETN (DLBS)
    3. Direxion Daily Developed Markets Bear 3X Shares (DPK)
    4. Columbia Sustainable Global Equity Income ETF (ESGW)
    5. Direxion Daily European Financials Bull 2X Shares (EUFL)
    6. ProShares UltraPro Short Financial Select Sector (FINZ)
    7. Franklin Liberty International Opportunities ETF (FLIO)
    8. Reality Shares DIVCON Dividend Guard ETF (GARD)
    9. ETRACS Monthly Reset 2xLeveraged ISE Exclusively Homebuilders ETN (HOML)
    10. Market Vectors Rupee/USD ETN (INR)
    11. ETRACS Monthly Pay 2xLeveraged MSCI US REIT Index ETN (LRET)
    12. Direxion Daily Mid Cap Bear 3x Shares (MIDZ)
    13. ETRACS 2xMonthly Leveraged S&P MLP Index ETN Series B (MLPZ)
    14. The Organics ETF (ORG)
    15. Direxion Daily Total Bond Market Bear 1x Shares (SAGG)
    16. ProShares UltraPro Short Com (SCOM)
    17. The Obesity ETF (SLIM)
    18. ProShares UltraPro Communica (UCOM)
    19. Direxion Shares ETF Trust-Direxion Daily Regional Banks Bear 3x Shares (WDRW)
    20. ProShares Daily 3x Inverse Crude ETN (WTID)
    21. ProShares UltraPro Short NASDAQ Biotechnology (ZBIO)

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