MacroMarkets is calling it quits on their oil -related exchange traded funds (ETFs), which are designed to track both the upside and downside to oil prices.Two MacroShares ETFs are getting terminated as of June 25, because assets on record have fallen below $50 million. David Hoffman for Investment News reports that registration statements provide for a termination when “the amount of cash and Treasuries on deposit in the down trust and/or up trust is less than $50 million per trust on any business day and we elect, in our discretion, to terminate the paired trusts.”
In an effort to stay in the markets, the provider is in the process of an IPO for their MacroShares Major Metro Housing Up (UMM) and MacroShares Major Metro Housing Down (DMM). The paired securities will have a five-and-a-half-year term and will feature a 300% leverage factor.
Right now the state of the ETF industry is in the rapid growth phase, with every idea and fund getting a chance to go to market. Providers are trying out every idea in an effort to figure out what is desired by investors.
There have been several ETF closings in the last year or so. The liquidation of tiny funds that can’t attract any market share are the first to go, and many other funds are sure to follow in these tracks, and by all means, these are not the first to close up shop either, reports Chuck Jaffe in his syndicated column. A lot of ETFs could go away, because they’re based on ideas that just haven’t caught on with investors. No one has really bought these funds, so no one will miss them.
Every industry has its hits and its flops – not everything can be a winner, and it’s all part of natural selection, as well as keeping competition lively and healthy.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.