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 decreased in size in October. Twenty exchange-traded products (“ETPs”) were added to the list, and 33 funds were removed. Ten of those removals were due to increased health, and 23 were due to asset managers closing their funds. The removals due to fund closures make sense, as 2020 continues to set a record pace for ETF closures.

The increase in additions to the Deathwatch list was expected, as all three major indexes posted negative performance through October. The funds added to the list were a mix of emerging-market funds, U.S. equity funds, and bond funds. All of the funds 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/or interest remain low, these funds may be considered for closure.

All but three of the funds added to the Deathwatch list in October track equities, which makes sense given the poor performance of equities during that month. As COVID-19 cases continued to rise globally last month, many investors may have become concerned about the economic outlook internationally. It’s also possible that investors and advisers fled to safe-haven assets given the state of equities in October, which may explain why only three of the additions to the list were fixed-income funds.

The removals from the Deathwatch list due to improved health included equity, fixed-income, and commodity funds, as well as some niche products (including smart beta and strategic funds). Investors may have opted to move into more actively managed strategies in October because of the market uncertainty stemming from the elections and rising COVID-19 cases.

Forty-seven 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 clients interested in active management.  

The average asset level of the threatened ETFs on ETF Deathwatch increased from $7.98 million to $8.39 million, and 39 products had less than $2 million in assets (down from 48 in September). The average age of products on the list increased from 55.06 months to 55.45 months, and the number of products more than 5 years of age remained at 117. The largest ETF on the list had an AUM of $24.02 million, while the smallest had assets of just $330,000.

Here is the Complete List of 351 ETFs and ETNs on ETF Deathwatch for October 2020 compiled using the objective ETF Deathwatch Criteria.

The 20 ETFs/ETNs added to ETF Deathwatch for October:

  1. Innovator S&P 500 Buffer ETF-May (BMAY)
  2. Xtrackers MSCI All China Equity ETF (CN)
  3. First Trust DorseyWright DALI 1 ETF (DALI)
  4. iShares Asia/Pacific Dividend ETF (DVYA)
  5. First Trust Dorsey Wright Peoples Portfolio ETF (DWPP)
  6. Invesco S&P SmallCap 600 Equal Weight ETF (EWSC)
  7. Franklin LibertyQ Emerging Markets ETF (FLQE)
  8. Freedom 100 Emerging Markets ETF (FRDM)
  9. iShares iBonds Dec 2027 Term Treasury ETF (IBTH)
  10. iShares iBonds Dec 2028 Term Treasury ETF (IBTI)
  11. iShares iBonds Dec 2029 Term Treasury ETF (IBTJ)
  12. Overlay Shares Foreign Equity ETF (OVF)
  13. FlexShares Quality Dividend Dynamic Index Fund (QDYN)
  14. WisdomTree Dynamic Currency Hedged International Quality Dividend Growth Fund (RESD)
  15. iShares Factors US Blend Style ETF (STLC)
  16. iShares Factors US Mid Blend Style ETF (STMB)
  17. iShares Factors US Small Blend Style ETF (STSB)
  18. Innovator S&P 500 Ultra Buffer ETF-May (UMAY)
  19. AdvisorShares Vice ETF (VICE)
  20. ProShares Short FTSE China 50 (YXI)

The 10 ETFs/ETNs removed from ETF Deathwatch due to improved health:

  1. Invesco S&P International Developed Momentum ETF (IDMO)
  3. iPath S&P 500 Dynamic VIX ETN (XVZ)
  4. Global X FTSE Southeast Asia ETF (ASEA)
  5. iPath Series B Bloomberg Cotton Subindex Total Return ETN (BAL)
  6. Invesco BulletShares 2025 Municipal Bond ETF (BSMP)
  7. ProShares Ultra MSCI EAFE (EFO)
  8. Global X FTSE Nordic Region ETF (GXF)
  9. WisdomTree Modern Tech Platforms Fund (PLAT)
  10. IQ Hedge Long/Short Tracker ETF (QLS)

The 23 ETFs/ETNs that were closed:

  1. AdvisorShares Vice ETF (ACT)
  2. USCF SummerHaven SHPEI Index Fund (BUY)
  3. VelocityShares Daily 4x Long USD vs AUD Index ETN (DAUD)
  4. VelocityShares Daily 4X Long USD vs. CHF Index ETN (DCHF)
  5. VelocityShares Daily 4X Long USD vs. EUR Index ETN (DEUR)
  6. VelocityShares Daily 4X Long USD vs. GBP Index ETN (DGBP)
  7. VelocityShares Daily 4X Long USD vs. JPY Index ETN (DJPY)
  8. First Trust Australia AlphaDEX Fund (FAUS)
  9. First Trust Canada AlphaDEX Fund (FCAN)
  10. First Trust Hong Kong AlphaDEX Fund (FHK)
  11. First Trust South Korea AlphaDEX Fund (FKO)
  12. Direxion Daily Consumer-ETF (LACK)
  13. Miller/Howard MLP Fundamental Index (MLPC)
  14. Direxion Daily Comm Bear 3X (MUTE)
  15. Direxion Dly Cons Disc 3X BR (PASS)
  16. Sit Rising Rate ETF (RISE)
  17. VelocityShares Daily 4X Long AUD vs. USD Index ETN (UAUD)
  18. VelocityShares Daily 4X Long CHF vs. USD Index ETN (UCHF)
  19. VelocityShares Daily 4X Long EUR vs. USD Index ETN (UEUR)
  20. VelocityShares Daily 4X Long GBP vs. USD Index ETN (UGBP)
  21. VelocityShares Daily 4X Long JPY vs. USD Index ETN (UJPY)
  22. ProShares Ultra Communication (XCOM)
  23. ProShares Ultrashort Communication (YCOM)

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