There are many exchange traded funds listed in Europe struggling for assets that may soon close down due to lack of investor interest and a tough market.
In a research note, Detlef Glow, head of Lipper EMEA Research, notes 241 out of 542 ETFs older than 3 years have attracted less than 100 million euros.
However, Glow does not believe the industry will consolidate to combine and weed out smaller products.
“ETFs do not only generate income from management fees,” Glow said. “Other income like creation and redemption fees need also to be taken into account to evaluate the profitability of an ETF.”
ETF providers may even be reluctant to relinquish their vanity fund products.
“In addition some of these ETFs have been launched for marketing reasons or to complete product ranges,” Glow added.
Lipper concludes that the ETF industry will likely continue to expand their product lines, regardless of popularity of fund products.
“AUM is no valid measure to evaluate the profitability of an ETF,” Glow said. “No trend to consolidation in the ETF industry foreseeable at the moment.”
U.S.-listed funds have their own list of troubled funds. According to Ron Rowland’s ETF Deathwatch list, there were 324 ETPs – 229 ETFs and 95 exchange traded notes – under duress out of 1,319 listed products available in May. The funds on the list have been trading for an average 25.4 months and hold an average $6.4 million in assets. [Why ‘Zombie’ ETFs are Still Kicking]
The U.S.-listed deathwatch is comprised of funds older than six months, and ETPs that have dollar volumes of below $100,000 for three consecutive month or under $5 million in assets under management over three consecutive months.
For more information on ETF asset flows, visit our ETF performance report 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. 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.