ETF Closures Accelerate

After years of rapid-fire expansion that saw some issuers seemingly roll out any product that came to mind, predictions for a wave of ETF closures have become increasingly common. 

And while 2010 saw continued growth in the ETF product lineup–more than 200 new funds launched–it also saw its fair share of closures. More than a half dozen issuers–including Direxion, PowerShares, Javelin, Grail, Claymore (now Guggenheim), Rydex, and WisdomTree–shuttered ETFs at some point in 2011, and two more issuers, Geary Advisors and GlobalShares, exited the U.S. ETF industry altogether.

This trend also seems poised to continue into 2011; at the end of November, more than 350 ETFs had assets of fewer than $25 million–a rule-of-thumb break even point for ETF issuers. While some of these funds in the bottom AUM tier are new products just hitting their sweet spot, others have been around for a while and seem unlikely to ever gain much traction.