Tag Archives: SPA-ETF

SPA ETF to Close All 6 of its Funds

Another one bites the dust.

SPA ETFs announced late Monday that it plans to close all six of its SPA MarketGrader ETFs. Their last day of trading on the NYSE Arca will be March 25 and they will be liquidated March 30. The six funds trade separately in the U.S., United Kingdom and Italy.

The six funds affected:
SPA MarketGrader 40 Fund (SFV)
SPA MarketGrader 100 Fund (SIH)
SPA MarketGrader 200 Fund (SNB)
SPA MarketGrader Small Cap 100 Fund (SSK)
SPA MarketGrader Mid Cap 100 Fund (SVD)
SPA MarketGrader Large Cap 100 Fund (SZG)

The funds’ board of trustees has been in consultations with SPA ETFs, the investment advisor to the funds, for the past few weeks, to discuss the future of the ETFs. Two weeks ago, the board came close to deciding to shut down the funds, but chose instead to seek further information, according to sources. While it’s unknown what new data forced this decision, SPA said in a written statement that the “board determined current market conditions are unsuitable for a long-only equity investment strategy, such as the one employed by the SPA MarketGrader ETFs.” They decided closing the funds would be in the best interest of the shareholders.

As of Friday, the six U.S. funds assets totaling $10.4 million, while the European funds held $7.5 million, reported IndexUniverse.

“In light of the current market environment keeping the SPA MarketGrader Funds open would compromise investors and increase costs,” said Daniel Freedman, managing director of SPA ETFs, in a written statement. However, the company plans to stay in the ETF market. “The SPA ETF Trust remains open and we plan to partner with other institutions to bring new ETFs to market in Europe and the U.S. in 2009. Additionally, when market conditions improve we may reintroduce the MarketGrader strategy.”

SPA is a sister company to 22-year-old British money manager London & Capital. The U.S. funds launched in October 2007, a month after the British funds, and made SPA the first foreign company to launch ETFs in the U.S. Barclays Global Investors, a unit of Barclays, a British bank, is headquartered in San Francisco. The SPA funds are based on indexes from MarketGrader which uses 24 fundamental factors to grade every stock in the U.S. market and pulls the ones that score best in four key areas — growth, value, profitability and cash flow. While the index uses fundamental criteria to pick stocks, the indexes are not fundamentally weighted, like the ETFs from WisdomTree and PowerShares’ FTSE RAFI series.

Ironically, from their inception until June 2008, the MarketGrader funds consistently outperformed the S&P 500 and often beat comparable funds from WisdomTree and PowerShares.

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ETFs See Cash Inflows Even as Asset Values Fall

ETFs and ETNs continue to see net cash inflows even as total assets under management fall. The conclusion is this is a function of just falling asset values.

According to the National Stock Exchange (NSX), at the end of November, total U.S. listed ETF and ETN assets fell 16.8% to $487.6 billion from $585.8 billion in November 2007. However, net cash inflows for the month were $26.4 billion, bringing the total net cash flow for the 11 months through Nov. 30 to $136.8 billion. In November, 315 ETFs saw net cash inflows, while 179 saw outflows. ETNs split at 16 each.

Notional trading volume in both ETFs and ETNs fell 33% in November from October to $2.2 trillion. Surprisingly, this represents a record 43% of all U.S. equity trading volume, up from 38% in October. That just shows how much total equity volume must have fallen off. At the end of November 2008, the number of listed products totaled 843, compared with 650 listed products one year ago and 806 in October.
According to the NSX, the only ETF firms that saw assets grow are State Street Global Advisers, ProShares, Van Eck and

Ameristock/Victoria Bay. All those firms saw net cash inflows for the year through Nov. 30 increase compared with the first 11 months of 2007. Vanguard did as well. ProShares’s assets under management rocketed 112% to $20.9 billion. SSGA’s assets grew 8.3% to $142.9 billion. This really shouldn’t be a surprise. ProShares sponsors the inverse and leveraged ETFs that have proved hugely popular in the market turmoil. SSGA sells the largest, most liquid ETF, the SPDR (SPY), which tracks the S&P 500. Many investors making a flight to safety or seeking a place to hold cash on a temporary basis will move to the S&P 500. Even as the S&P 500 sinks, the SPDR’s 2008 net cash inflows have surged 86% year-over-year through Nov. 30 to $18.23 billion.

Meanwhile, BGI’s iShares saw assets tumbled 29% to $229.3 billion.

Firms with net cash outflows in November included PowerShares, $309 million, and Merrill Lynch’s HOLDRs, which saw redemptions of $889 million. Surprisingly, the HOLDRs saw net cash outflows of $3.6 billion in 2007, but are up $1.2 billion so far this year. Other firms that experienced outflows in November were WisdomTree, FirstTrust, and SPA-ETF. Firms with net outflows year-to-date include Bank of New York, Rydex, X-Shares, Ziegler, FocusShares and BearStearns. The last two have gone out of business this year. Rydex is suffering as the strengthening dollar hurts its CurrencyShares.

As for ETNs, Barclay’s iPath family saw assets plunge 36% to $2.6 billion. In November, iPath saw outflows of $39 million. Morgan Stanley/Van Eck ETNs recorded outflows of $16 million in November. Meanwhile, Goldman Sach’s ETNs net cash outflows grew to $97 million year-to-date. Comparisons are not relevant for many of the other ETN firms as they had few funds, if any, last year.

Among the top ten ETFs and ETNs, the SPDR (SPY), iShares MSCI EAFE Index Fund (EFA), SPDR Equity Gold (GLD), iShares S&P 500 Index Fund (IVV), iShares Russell 1000 Growth Index Fund (IWF) and iShares Russell 2000 Index Fund (IWM) all saw net cash inflows in November, according the NSX. Of the 10 largest funds, these saw outflows last month: iShares MSCI Emerging Markets Index Fund (EEM), PowerShares QQQ (QQQQ), iShares Barclays Aggregate Bond Fund (AGG) and the Dow Diamonds (DIA).

The NYSE Group also releases volume data for its exchanges. Average daily matched volume for ETFs, or the total number of shares of ETFs executed on the entire NYSE Group’s exchanges surged 93.5% to 672 million shares from 347 million shares in November 2007. Total matched volume for the month totaled 12,765 million shares, a 75.1% increase. Total volume year-to-date through Nov. 30 jumped 74.7% from the same period last year to 102,583 million shares.

Handled volume, which represents the total number of shares of equity securities and ETFs internally matched on the NYSE Group’s exchanges or routed to and executed at an external market center, totaled 14,813 million shares last month, a 77.6% surge over the year-ago month. Average daily handled volume rocketed 96.3% to 780 million shares from 397 million shares a year ago. Year-to-date total volume climbed 78.1% to 117,629 million shares.

The NYSE also reported total ETF consolidated volume for the month leapt 92.1% to 45,151 million shares, while total average daily volume soared 112.3% to 2,376 million shares. Year-to-date, total consolidated ETF volume surged 119.4% over the first 11 months of 2007 to 355,133 million shares. I think those refer just to the NYSE Group.