Just Too Many ETFs out There: Claymore to Close 11 Funds that Nobody Wants
Do you think there are just too many ETFs out there?
Apparently, there are. The latest evidence came from Claymore Securities Inc, one of the major issuers of exchange-traded funds (ETFs), which in an announcement last week says it will close 11 of its 37 ETFs on February 20th and liquid assets in these funds on February 28th.
The following is a table of those Claymore ETFs to be closed, together with each fund’s inception data and daily trading volume (volume data from XTF). Except one, all the other10 funds are less than one year old with very thin volume.
|Fund name||Symbol||Inception||Daily volume|
|Claymore/BIR Leaders 50||BST||04/02/07||1,100|
|Claymore/KLD Sudan Free|
Partners Large-Cap Value
Growth & Income Index
A product that nobody wants will be pulled off the shelf and that’s the same for a ETF that nobody trades.
In 2007, the total number of ETF offerings almost doubled, growing from 359 in 2006 to 613. However, many new, exotic ETFs failed to attract investors attention. If you take a look at Morningstar’s ETF page, you will be surprised to see many ETFs are barely traded at all. The closure of those Claymore funds reminds us that when researching which ETF to invest, we should also pay attention to the fund’s trading volume. After all, we don’t want to be in a situation that we are forced to sell our positions.
As ETFs gaining popularity among investors, I wonder whether the ETF industry has reached a point that they roll out new products just for the sake of rolling out new products to collect more fees from investors. Like John Bogle, founder of Vanguard, previously described in his book The Little Book of Common Sense Investing,
ETFs are clearly a dream come true for entrepreneurs, stock brokers, and fund manager.
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