XShares Advisors announced on Wednesday that it plans to liquidate the four remaining HealthShares ETFs at the end of the year and subsequently dissolve the HealthShares registered investment company.
The four ETFs are the HealthShares Cancer Exchange Traded Fund (HHK), HealthShares European Drugs ETF (HRJ), HealthShares Diagnostics ETF (HHD), HealthShares Drug Discovery Tools ETF.(HHV).
The funds’ board of directors decided to take the action in light of the current market conditions. Since their inception the HealthShares funds had been unable to attract significant market interest. Launched in January 2007 as a family of 19 funds, HealthShares offered portfolios that tracked extremely narrow, highly specialized areas of the health-care industry, such as cardiology, orthopedics and dermatology.
In August, with only a total of $100 million in assets under management, Xshares, the investment advisor to the fund, closed 15 of the 19 ETFs. The four remaining funds held about half the total assets. Then in October, the benchmark indexes for the surviving four were redesigned to hold between 28 and 35 stocks, up from the 22 with which they originally launched. All four also lowered their expense ratios to 0.60%, except for European Drugs, which charged 0.72%. This move came on the heels of Xshares closing its AdelanteShares family of seven real estate ETFs in June. In their nine months of existence they accumulated only $17 million of assets under management. Also in June, Xshares sued its chairman, founders, current and former CEOs and others for fraud and other charges.
The HealthShares board on Wednesday said the funds’ future viability and prospects for growth in assets in the foreseeable future were not encouraging. Thus, the board determined that it was in the best interests of the funds and their shareholders to liquidate
“We continue to believe in the fundamentals of the healthcare industry. Unfortunately under these tough market conditions, the Funds were unable to achieve meaningful investor traction,” said Joseph L. Schocken, chairman and chief executive officer of XShares Group, parent company of Xshares, in a written statement. “We remain strongly committed to bringing our products now under review to market. In 2009, we expect to launch additional products related to the environment and infrastructure.”
The TDAX series of lifecycle ETFs that XShares launched in partnership with TD Ameritrade continue to trade.
The HealthShares last day of trading on the NYSE Arca and the last day share may be purchased or redeemed will be Dec. 23. Trading will halt before the open Dec. 24. From Dec. 24, through Dec. 31, shareholders may sell their Shares to certain broker-dealers who may determine to continue to purchase such shares, but there can be no assurance that any broker-dealer will be willing to purchase the shares or that there will be a market for the shares. All shareholders remaining on Dec. 31, 2008 will receive cash equal to the amount of the net asset value of their shares that day.
For additional information about the liquidation, shareholders may call XShares at 1-800-925-2870.