In a recent Wall Street Journal article, Daisy Maxey discusses XShares and their recent ETF closings in “XShares to Close 15 Health ETFs”.
Xshares Advisors LLC plan to close 15 of its 19 exchange-traded funds that focus on subsectors of the health-care industry. The 15 funds currently have approximately $50 million in assets – equivalent to the sum of the four funds remaining open.
XShares still believes “in the concept behind [HealthShares ETFs] and the intellectual property that underpins” the funds’ index, according to Marsha Zapson, a spokesperson for XShares Advisors.
Paul Justice, an ETF strategist at Morningstar, considered some of the HealthShares ETFs overly specialized and this hindered their ability to attract adequate assets under management.
The company is redesigning some of the funds that are closing in hopes to lower expense ratios in order to gain traction with the investing public.
Investors should be concerned about ETF closures. They may have to reallocate their funds and such events may translate into a taxable event. Mr. Justice from Morningstar says that ETF closures are expected and are just part of the industry.