Although the exchange traded fund business continues to pump out new products, not every ETF makes it. Some shut down due to lack of assets and trading volume.
The JETS Dow Jones Islamic Market International Index Fund, for example, is closing as it failed to attract the necessary assets to become viable, writes Selena Maranjian for The Motley Fool.
The Direxion Airline Shares ETF is also closing shop. While investors have shown interest in this area, notably through the ETF Guggenheim Airline (NYSEArca: FAA), the airline industry has not been a strong investment. The industry is grappling with bankruptcy rumors and a drop in customers.
For those who are worried that their ETF picks may close, keep watch or avoid ETFs with low assets. Fund providers typically keep $100 million as an arbitrary make-or-break number. ETFs with more than $500 million in assets are usually in solid standing.
In 2008, 2009, and 2010, about 50 ETFs shut down annually, according to the report.
Ron Rowland for Invest With An Edge has provided an “ETF Deathwatch” for September 2011, which includes 163 funds at the moment.
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.