Global X, the New York-based issuer of many international and specialized funds, announced recently that it will close out four of its ETFs that have not attracted assets compared to their other popular funds like the SIL and GXG. October 18 will be the last day of trading for these ETFs:

  • Aluminum ETF (ALUM): Even though it was the most heavily-traded ETF of this bunch it was still only traded 2,600 shares a day, while the majority of Global X's 35 ETFs more than doubling that.
  • Auto ETF (VROM): The largest ETF on the chopping block, VROM had only $2.6 million in assets. VROM's specified interest in the auto industry can also be found in CARZ, a First Trust ETF, which follows the most liquid automanufacturersaround the world.
  • NASDAQ 500 ETF Profile (QQQV): This straightforward ETF, like QQQM, is not even a year old and just never came into its own. While no other ETF specifically tracks the NASDAQ 500, ETFs like the PowerShares QQQ, or the equal-weighted QQEW, offer exposure to stocks listed on that tech-heavy exchange.
  • NASDAQ 400 Mid Cap ETF (QQQM): The smallest of them all, this ETF only had $1.4 million in assets and fewer than 500 shares were on an average day.

Wave of Closures Continues

After years of significant expansion in the product roster, the second half of 2012 has seen a definite wave of contraction wash over the industry. Dozens of ETFs have been shuttered over the past few months, including the entire FocusShares product suite and substantially all of the Russell lineup. Other ETF issuers have announced strategic trimmings of their products.

Though each ETF is unique, the breakeven point from the perspective of the issuer is generally thought to be between $25 million and $50 million. Funds that fail to reach that critical mass are essentially run at an operating loss, costing the sponsor money to keep open. With hundreds of additional ETFs falling below those thresholds, it is possible that further contraction in the industry is ahead in the remainder of 2012 and into 2013.

Disclosure: No positions at time of writing.

Related Articles
  1. Mutual Funds & ETFs

    Top Three Transportation ETFs

    These three transportation funds attract the majority of sector volume.
  2. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  3. Investing Basics

    Tops Tips for Trading ETFs

    A look at two different trading strategies for ETFs - one for investors and the other for active traders.
  4. Investing

    How to Win More by Losing Less in Today’s Markets

    The further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
  5. Fundamental Analysis

    Use Options Data To Predict Stock Market Direction

    Options market trading data can provide important insights about the direction of stocks and the overall market. Here’s how to track it.
  6. Stock Analysis

    2 Oil Stocks to Buy Right Now (PSX,TSO)

    Can these two oil stocks buck the trend?
  7. Investing News

    What Alcoa’s (AA) Breakup Means for Investors

    Alcoa plans to split into two companies. Is this a bullish catalyst for investors?
  8. Mutual Funds & ETFs

    Top 4 Investment Grade Corporate Bonds ETFs

    Discover detailed analysis and information about some of the top exchange-traded funds (ETFs) that offer exposure to the investment-grade corporate bond market.
  9. Insurance

    The 5 Biggest Russian Insurance Companies

    Discover the five companies that dominate the Russian insurance market, and learn a little more about their business operations and ownership.
  10. Stock Analysis

    Top 3 Stocks for the Coming Holiday Season

    If you want to buck the bear market trend by going long on consumer stocks, these three might be your best bets.
  1. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  6. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!