Back to top

ETF News And Commentary

Zacks Equity Research

ETF Closures Strike Again: UBS Shuttering Seven Products

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

The ETF industry continues to expand at a rapid pace with the introduction of new products. Yet, we have seen a number of closures in the past few months as well, suggesting it hasn’t been entirely smooth sailing for the ETF industry. Among the large fund providers, PowerShares abandoned 13 products and Guggenheim closed nine this year (read: Guggenheim Closing Down Nine ETFs).

Most recently, iShares, the leader in terms of market share, dropped the Diversified Alternatives Trust Fund (ALT), breaking its streak of no closures for over a decade.

. The number of closures increased from 30 in 2011 to nearly 100 at year-end 2012. Meanwhile this year, in total, over 30 funds have failed to attract investor interest so far this year, and thus, closed their doors

This trend is apparently continuing this summer with E-TRACS Investments and a big chunk of their ETN lineup now facing the chopping block. The Swiss investment bank, UBS, announced that it would shutter seven products this week, bringing its total offering down to 28. The seven ETNs are as follows:

  • E-TRACS  Monthly 2x Leveraged ISE Cloud Computing TR Index ETN
  • E-TRACS  Next Generation Internet ETN
  • E-TRACS  Monthly 2x Leveraged Next Generation Internet ETN
  • E-TRACS  ISE Solid State Drive Index ETN
  • E-TRACS  Monthly 2x Leveraged ISE Solid State Drive Index ETN
  • E-TRACS  DJ-UBS Commodity 2-4-6 Blended Futures ETN
  • E-TRACS CMCI Short Platinum Excess Return ETN

All these notes combine to have $63.19 million in assets and account for just 3% of the issuer’s total AUM. The products were probably losing money, and none showed any indication of drawing investor interest over the near term, even with some decent performances in the bunch. So, UBS considered it best to close down these unpopular products in order to focus its energies elsewhere.

A few on the list, such as EIPO, EIPL, PTD and BLND had less than $10 million in assets each and were generating meager revenues for the firm. Still, some were relatively unique, the cheaper option in the space, or were doing well compared to their peers. Overall, it is somewhat disappointing as products like EIPO and SSDD did track relatively novel—but obviously underappreciated—market segments (read: 5 Worst Performing ETFs So Far in 2013).

While these closures are discouraging, investors should note that there are other options in the space that offer similar exposure (see more ETFs in the Zacks ETF Center).

It should also be noted that the shares have stopped trading on the NYSE Arca at the close of business on June 5th. Additionally, open orders will be cancelled for those who haven’t had positions filled by the end of the products’ last trading day.

At the close of business on June 6th, UBS will pay investors holding these securities the applicable call settlement amount, ending the run for these seven ETNs forever.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%