FYI: “Death is very likely the single best invention of life,” said Steve Jobs, who knew a thing or two about innovation. “It’s life’s change agent. It clears out the old to make way for the new.”
It’s a cringeworthy approach to life but standard operating procedure in financial services. In fact, professionals in the exchange-traded fund industry spend a lot of time thinking about the ETF “mortality rate.” It’s both higher than you might think, and considered by ETF professional to be a good thing. But what does it mean for investors?
“I think it’s quite healthy to see firms closing products because it implies they are looking at their product mix and willing to admit when something did not work,” said Dave Nadig, managing director of ETF.com.
Conversely, Nadig said, “when you look at some of these firms that have a high churn, it’s reasonable to ask, is this because they’re willing to kill products that aren’t working — or because they’re launching too many funds to begin with?”
For many years, the ETF “open-close” ratio was 2:1, meaning that for every two funds that opened, one closed. Now, the ratio is closer to 1.2:1, Nadig said.
Regards,
Ted
https://www.marketwatch.com/story/these-are-the-companies-that-open-and-close-the-most-etfs-2019-11-12/print
