The eight Global X Funds
that were put on the path to liquidation this week will likely not be the last. The Wall Street Journal's
Brendan Conway reports that the funds are a victim of an ETF marketplace that is becoming overcrowded "zombie" ETFs.
His takeaway was sparked by the decision by New York-based Global X Funds'
] plans to liquidate eight funds in late February.
Chief investment officer at Congress Wealth Management Peter C. Andersen says in a sense, the ETFs are "half-dead. Their growth just hasn't developed the way their creators hoped." He adds that the sponsors hope the zombie will be "reanimated into a thriving, growing
entity" but this is not the case.
Capital Cities Asset Management president Ron Roland has 242 funds on his "ETF Deathwatch" list. The funds he included on his list is 17 percent of the 1400-ETF industry, all of which have underperformed in the last three months with fewer than $5 million in assets or fewer than $100,000 worth of shares changing hands daily.
Seven out of the eight Global X Funds ETFs that will be plugged out of the market are on Rowland's deathwatch list. The $533,000 Global X Mexico Small-Cap ETF is the smallest ETF in the country. Big players in the ETF industry who get 80% are BlackRock, State Street's State Street Global Advisors unit and Vanguard Group Inc.
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