WisdomTree Closing Down Three ETFs - ETF News And Commentary
26 Outubro 2012 - 8:30AM
Zacks
WisdomTree, the New York-based ETF issuer best known for its
lineup of dividend-weighted funds, appears to be succumbing to the
recent trend of closures in the industry. The company recently
announced that it would be shuttering three funds, bringing its
total offering down to 46.
The three products that the firm will be closing include the
South African Rand Fund (SZR), the Dreyfus
Japanese Yen Fund (JYF), and the LargeCap Growth
Fund (ROI). All three combine to have less than $25
million in assets and account for less than 0.2% of the company’s
total AUM.
Given this, and since all three have had a substantial amount of
time to garner assets (all three debuted at various points in 2008)
WisdomTree felt that it would be best to shut the doors on these
unpopular products in order to focus its energies elsewhere. After
all, all three were probably money losers for the company, and none
showed any indication of surging investor interest in the near term
(Read State Street Debuts Unique Momentum and Value ETFs).
According to a PDF on the company’s site, shares will stop
trading on NYSE Arca after the close of business on Monday,
December 3, 2012. If investors do not sell by that date, shares
will automatically be redeemed one week later and investors will
receive a cash payment of their NAV at the close of business.
While this is somewhat disappointing that we are again seeing
some more closures, investors should note that there are other
options out there to gain similar exposure for two of the
three.
However, in the case of SZR, this marks the end of ETF exposure
to the South African rand as no other fund currently on the market
is focused on this currency. Yet for JYF and ROI, there are at
least a few other options out there, some of which we have
highlighted below:
In the case of JYF, there is one very popular Japanese yen ETF
which offers substantially similar exposure. However, the fund, the
CurrencyShares Japanese Yen Trust (FXY), has
assets over $125 million and volume over 200,000 shares a day,
giving investors a very liquid and popular choice beyond the
soon-to-be closed WisdomTree currency product (read Bet Against the
Dollar With These Three Currency ETFs).
Meanwhile, for ROI and its large cap growth focus, there are a
number of other options out there that can provide similar
exposure. Among the most popular are IWF, VUG, and IVW, all of
which have over $7 billion in AUM and volume exceeding more than
100,000 shares a day.
Any of these three look to provide investors with a growth tilt
on large cap stocks, acting as a nice substitute for those who were
in, or were considering, ROI for their portfolio (see Active Large
Cap ETFs: The Best of Both Worlds?).
So really the only product that is a true loss for the ETF
industry is SZR, but currency ETFs have had a spotty track record
to say the least. If anything, WisdomTree’s closures underscores
that currency-based funds are a hard sell among many investors who
seem as though they enjoy obtaining their exposure to these
instruments directly in the forex market instead.
Lastly, it also shows that there can only be so many ETFs in any
particular niche, at least at this point in the industry. This is
especially true in the large cap growth space where competition is
particularly fierce with a number of heavily entrenched funds with
huge AUM bases (read the Guide to the Most Popular ETFs).
Still, the closures shouldn’t be viewed as too big of a deal
either for WisdomTree or the broader ETF space. Sometimes a product
just doesn’t catch on and that appears to have been the case with
SZR, JYF and ROI over the past few years.
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WISDMTR-JAP YEN (JYF): ETF Research Reports
WISDMTR-LC GROW (ROI): ETF Research Reports
WISDMTR-SA RAND (SZR): ETF Research Reports
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