Is this a harbinger of what’s to come in the active ETF market? Invesco PowerShares, the first ETF sponsor to issue actively-managed ETFs, today announced it was closing two of its five actively-managed funds.
The PowerShares Active Alpha Multi-Cap Fund (PQZ) and the PowerShares Active AlphaQ Fund (PQY) will stop trading on September 30. Shareholders who don’t sell their shares before Sept. 30 will receive cash equal to the net asset value of their shares, including any capital gains and dividends, in their brokerage accounts on the distribution date, currently scheduled for October 6.
Ben Fulton, Invesco PowerShares managing director of global ETFs, said the firm regularly evaluates its ETFs for investor interest and the potential for future growth. “Based on this assessment, we believe that it’s in the best interest of our investors that we refocus our resources on areas that we believe are of greater client interest.”
It’s not surprising that the Active Alpha Multi-Cap Fund has just $3.9 million in assets. Over the past three years, it’s down 12.5% annualized vs. a 1.5% gain in the S&P 500 Index, according to Morningstar. Year-to-date it’s down 5.1% vs. the S&P being up 2.4%. The Active AlphaQ Fund is doing a bit better, up 4.5% over the past three years, annualized, and up 3.6% year-to-date, it has $10.7 million in assets.
The funds had the misfortune to launch before the summer of 2008. The past three years haven’t been a great time for active managers. But it also shows that despite the industry continuing to launch actively-managed ETFs they still haven’t garnered much of a following.
ETF Database says there are currently 39 actively-managed ETFs: 13 equity, 13 fixed income, nine currency and four alternative assets.
PowerShares three remaining actively-managed ETFs have a total of about $45 million in assets. They are the PowerShares Active Low Duration Fund (PLK), PowerShares Active Mega Cap Fund (PMA), PowerShares Active U.S. Real Estate Fund (PSR).