Global X Getting Rid Of Seven ETFs

Global X, best known for its innovative and thematic ETFs, has lately announced that it would be closing down seven ETFs, as per an article published on etf.com. Those funds will last trade on October 6. The inability to generate assets under management seems to be the reason for the closure.

Among seven, there were three Latin America ETFs, of which two were of Brazil. One was from the Guru series. Though the products were likely money losers for the company, one thing is sure that these closures reduce investor options in a number of market segments.

After shutting down these products, the issuer would now be dealing with 51 ETFs. Below we highlight the seven ETFs that are going to be closed.

Global X Brazil Consumer ETF BRAQ

The lack of interest in Brazil consumer ETF is somewhat surprising as household spending rose for the first time in two and a half years in the second quarter of 2017. This clearly shows that Brazilian consumers played a major role in economic recovery. Still, the fund couldn’t generate enough assets (managed to gross only $6.9 million since inception in July 2010).

Global X Brazil Mid Cap ETF BRAZ

The situation was the same with the Brazil mid-cap ETF.First, the economy returned to growth in the first quarter of 2017, after two-years of recession. Then it grew 0.2% sequentially in the second quarter of 2017, following 1% advancement in the previous period and beating market expectations of 0.1% expansion (read: Brazil Economy on a Roll: ETFs to Cash In On).

Since small-and mid-cap stocks perform better in a growing economy, the fund should have performed better. But in reality, it failed to do so. The fund debuted in Jun 2010 and amassed just $5.2 million in assets.

Global X FTSE Andean 40 ETF AND

The underlying index of the fund – the FTSE Andean 40 Index – looks to measure the performance of the 40 largest companies listed on the Chile, Colombia and Peru stock exchanges. Still, since its inception in Feb 2011, the fund has raked in only $6.3 million in assets.

Global X Junior MLP ETF MLPJ

With the long-standing pain in the energy space, the underperformance and the lack of interest in a small-cap MLP ETF is understandable. Since making an entry in Jan 2013, the fund has amassed only $7.6 million in assets.

Global X Guru Activist Index ETF ACTX

The fund entered the industry in Apr 2015 and has gathered only $1.6 million in assets. The fund looks to track about 50 portfolios of key activist investors in the United States.

Global X Permanent ETF (BK:PERM)

The fund has amassed about $7.7 million, after entering the industry in Feb 2012. The fund was rather unique in nature as it looks to track stocks, short-and-long-term treasuries and precious metals almost equally (read: Multi-Asset ETFs for Uncertain Markets).

Bottom Line

As per etf.com, September has seen a record number of closures, “with 42 set to complete by the start of October.” And why not? After all, the ETF industry is fast evolving, dumping plain-vanilla boring products and launching active, novel, factor-based and thematic products. Investors are perhaps getting more attracted to this new suite of ETFs.

Issuer Global X is especially active on this front. The company has a number of pretty popular and innovative products that probably need more attention. As per Global X, its family of thematic ETFs looks to track companies that reap returns from “structural changes in people and demographics, technology and innovation, and natural resources, along with companies that exhibit a particular set of desirable values.”

In a nutshell, there is no dearth of investor interest in ETFs. The broader ETF pace appears to be going strong as evident from close to 2040 ETFs with an aggregate market cap of $3.18 trillion in assets.

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