Why aren’t more ETFs closing? Or asked another way, why are ETF sponsors willing to support uneconomic funds? In short, they are hoping for a hit. These firms are hoping that wave of assets will hit these currently obscure funds. That is why ETF firms are so interested in launching funds across a broad range of assets. In part because they don’t know what market is going to get hot. Who knows when (or if) the ETF industry will rationalize these small funds, but investors should at least be aware if ETFs they are invested in, or contemplating investing in, are potential orphans. In today’s screencast a look at the ETF industry’s apparent patience with small funds.
Items mentioned in the above screencast:
Where are all the ETF closures? (ETFdb)
Orphan ETFs. (Abnormal Returns)
ETF Deathwatch for April 2011. (Invest With An Edge)