Lesson: Regulations affect ETFs, and reasons for closures can come out of left field.
DENT Tactical (DENT), 2009-2012
This actively managed ETF turned off investors with its poor performance, confusing objective, high expense ratio of 1.49 percent and turnover of 456 percent. This is the sort of thing ETF investors thought they left behind in the mutual fund world. DENT collected only $6 million in assets before throwing in the towel in August of 2012.
Lesson: No one likes to be overcharged for underperformance.
FaithShares Christian Values (FOC), 2009-2011
This fund was one of a religiously responsible product line of ETFs created by Oklahoma City-based FaithShares Funds that failed to attract assets. After the funds closed, FaithShares found a way to use a valuable asset it still held––namely, regulatory approval from the Securities and Exchange Commission to issue ETFs. It renamed itself Exchange Traded Concepts (ETC) and now helps other, smaller companies that don't yet have issuer approval to get their ETFs out faster.
Exchange Traded Concepts has helped seven ETFs come to market, including the $237 million Yorkville High Income MLP ETF (YMLP). It has many more on the way, including a filing for the first-ever robotics ETF, with the ticker ROBO.
Lesson: People invest to make money.
Guggenheim Airlines (FAA), 2009-2013
Many ETF pundits, including yours truly, are convinced this ETF could have made it if given the proper marketing love. It already had $21 million when it closed; the average closed ETF had $9 million. It was having a great year – up 24 percent in the first three months of 2013, compared to 10 percent for the S&P 500. It also had a great ticker in FAA (Federal Aviation Administration, anyone?). In addition, FAA, with its airline stocks, had an exploitable relationship with oil, since airline stocks typically go up when oil goes down, because fuel becomes cheaper. Yet it didn’t seem like anyone was out there promoting it.