The past decade has seen an explosion in new exchange-traded funds, which are passive index tracking funds. Investors have flocked to ETFs because they can be bought and sold like individual stocks, but offer the diversification benefits of mutual funds — all at a low cost.
But not all funds attract investors, and ETFs are dying off at a near-record rate this year. Fund closures can create a costly hassle for investors. Here's what to do if you face an ETF closure — and how to avoid one in the future.
Why are ETFs closing?
The industry's rapid growth resulted in some funds that proved to be too niche and failed to attract investors. By the end of September, 132 ETFs had permanently stopped trading this year, only six less than the record of 138 in 2017, according to data from ETF.com. Even so, the number of new funds launched year-to-date, 189, still outpaces closures.
If you stick with the largest ETFs that track broad market gauges (like the S&P 500) or major asset classes (like bonds), you may never encounter a fund closure. But, if you get more creative when shopping for ETFs , you could get burned.
How ETF closures work
If the company overseeing an ETF in your portfolio decides to close it, you're a soon-to-be former shareholder. Perhaps the fund is liquidating because it didn't generate investor interest or attract sufficient assets to cover administrative costs; regardless, the manager no longer sees a viable business case for the ETF.
The ETF provider will generally announce the fund's closure by sending notice to shareholders, listing dates when it will stop trading and when its assets will be liquidated.
You have two options:
- Sell
Until the ETF stops trading, you can sell shares like normal. The fund will continue to track its underlying index, which helps ensure its price won't plummet to zero just because of the closure announcement. While you may wish to execute a limit order specifying a minimum selling price, there's a finite window to execute the trade, so you may not get your desired price.
- Await liquidation
You can also simply wait for the fund to be liquidated after its final trading day. The managers will sell all holdings in the fund, settle other obligations and divvy up the balance among remaining shareholders. The price per share from liquidation could differ from the fund's last trading price, so be aware of this risk.
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Unexpected taxes
The biggest hassle of an ETF closure is it upends your investment timeline, and there's nothing you can do about it. You're forced to sell or take liquidation proceeds, which can create a tax burden or lock in investment losses.
You may incur a capital gains tax on profits if the ETF's in a taxable account, that is, a non-retirement account - or if it is not part of an offshore portfolio. If you owned the fund less than a year, the profit will be taxed at your normal tax rate. If you owned it for longer than a year, you'll pay a lower long-term capital gains rate. On the other hand, if you sell for less than you bought, your loss on this investment can offset gains on others. Ask your tax preparer for advice.
How to avoid an ETF closure
You have plenty of options for ETFs that have very little risk of closing among the top 100 largest ETFs .
These funds have a proven track record, encompassing options that track broad market gauges, different geographies, specific industries or even other assets, like bonds. Among them, assets under management range from $259 billion to $7bn, with average trading volumes ranging from 70 million-plus shares a day to less than 100,000.
Looking at an ETF that's not on that list of the top ones? Pay attention to:
- Total assets: the amount of money the ETF has attracted in investment;
- Average volume: the average number of shares that trade each day
- Inception date: the date this ETF began trading;
- The ETF provider: the company name associated with the fund.
While there's no way to predict which funds will close, when researching an ETF on an online broker, look for red flags, including: ETFs that have not attracted much money in assets, have low average trading volume, have not gained much traction in the time they have been trading or those from providers that do not oversee many other funds. Compare ETFs that compete with one you are considering to answer these questions.
• Associated Press
U19 WORLD CUP, WEST INDIES
UAE group fixtures (all in St Kitts)
- Saturday 15 January: UAE beat Canada by 49 runs
- Thursday 20 January: v England
- Saturday 22 January: v Bangladesh
UAE squad:
Alishan Sharafu (captain), Shival Bawa, Jash Giyanani, Sailles
Jaishankar, Nilansh Keswani, Aayan Khan, Punya Mehra, Ali Naseer, Ronak Panoly,
Dhruv Parashar, Vinayak Raghavan, Soorya Sathish, Aryansh Sharma, Adithya
Shetty, Kai Smith
Company Profile
Company name: Cargoz
Date started: January 2022
Founders: Premlal Pullisserry and Lijo Antony
Based: Dubai
Number of staff: 30
Investment stage: Seed
if you go
The flights
Direct flights from the UAE to the Nepalese capital, Kathmandu, are available with Air Arabia, (www.airarabia.com) Fly Dubai (www.flydubai.com) or Etihad (www.etihad.com) from Dh1,200 return including taxes. The trek described here started from Jomson, but there are many other start and end point variations depending on how you tailor your trek. To get to Jomson from Kathmandu you must first fly to the lake-side resort town of Pokhara with either Buddha Air (www.buddhaair.com) or Yeti Airlines (www.yetiairlines.com). Both charge around US$240 (Dh880) return. From Pokhara there are early morning flights to Jomson with Yeti Airlines or Simrik Airlines (www.simrikairlines.com) for around US$220 (Dh800) return.
The trek
Restricted area permits (US$500 per person) are required for trekking in the Upper Mustang area. The challenging Meso Kanto pass between Tilcho Lake and Jomson should not be attempted by those without a lot of mountain experience and a good support team. An excellent trekking company with good knowledge of Upper Mustang, the Annaurpuna Circuit and Tilcho Lake area and who can help organise a version of the trek described here is the Nepal-UK run Snow Cat Travel (www.snowcattravel.com). Prices vary widely depending on accommodation types and the level of assistance required.
The five pillars of Islam
If you go
There are regular flights from Dubai to Addis Ababa with Ethiopian Airlines with return fares from Dh1,700. Nashulai Journeys offers tailormade and ready made trips in Africa while Tesfa Tours has a number of different community trekking tours throughout northern Ethiopia. The Ben Abeba Lodge has rooms from Dh228, and champions a programme of re-forestation in the surrounding area.
SPEC SHEET
Processor: Apple M2, 8-core CPU, up to 10-core CPU, 16-core Neural Engine
Display: 13.6-inch Liquid Retina, 2560 x 1664, 224ppi, 500 nits, True Tone, wide colour
Memory: 8/16/24GB
Storage: 256/512GB / 1/2TB
I/O: Thunderbolt 3 (2), 3.5mm audio, Touch ID
Connectivity: Wi-Fi 6, Bluetooth 5.0
Battery: 52.6Wh lithium-polymer, up to 18 hours, MagSafe charging
Camera: 1080p FaceTime HD
Video: Support for Apple ProRes, HDR with Dolby Vision, HDR10
Audio: 4-speaker system, wide stereo, support for Dolby Atmos, Spatial Audio and dynamic head tracking (with AirPods)
Colours: Silver, space grey, starlight, midnight
In the box: MacBook Air, 30W or 35W dual-port power adapter, USB-C-to-MagSafe cable
Price: From Dh4,999
If you go
The flights
There are various ways of getting to the southern Serengeti in Tanzania from the UAE. The exact route and airstrip depends on your overall trip itinerary and which camp you’re staying at.
Flydubai flies direct from Dubai to Kilimanjaro International Airport from Dh1,350 return, including taxes; this can be followed by a short flight from Kilimanjaro to the Serengeti with Coastal Aviation from about US$700 (Dh2,500) return, including taxes. Kenya Airways, Emirates and Etihad offer flights via Nairobi or Dar es Salaam.
RESULTS
Bantamweight
Victor Nunes (BRA) beat Siyovush Gulmamadov (TJK)
(Split decision)
Featherweight
Hussein Salim (IRQ) beat Shakhriyor Juraev (UZB)
(Round 1 submission, armbar)
Catchweight 80kg
Rashed Dawood (UAE) beat Otabek Kadirov (UZB)
(Round-1 submission, rear naked choke)
Lightweight
Ho Taek-oh (KOR) beat Ronald Girones (CUB)
(Round 3 submission, triangle choke)
Lightweight
Arthur Zaynukov (RUS) beat Damien Lapilus (FRA)
(Unanimous points)
Bantamweight
Vinicius de Oliveira (BRA) beat Furkatbek Yokubov (RUS)
(Round 1 TKO)
Featherweight
Movlid Khaybulaev (RUS) v Zaka Fatullazade (AZE)
(Round 1 rear naked choke)
Flyweight
Shannon Ross (TUR) beat Donovon Freelow (USA)
(Unanimous decision)
Lightweight
Dan Collins (GBR) beat Mohammad Yahya (UAE)
(Round 2 submission D’arce choke)
Catchweight 73kg
Martun Mezhulmyan (ARM) beat Islam Mamedov (RUS)
(Round 3 submission, kneebar)
Bantamweight world title
Xavier Alaoui (MAR) beat Jaures Dea (CAM)
(Unanimous points 48-46, 49-45, 49-45)
Flyweight world title
Manon Fiorot (FRA) v Gabriela Campo (ARG)
(Round 1 RSC)
THREE POSSIBLE REPLACEMENTS
Khalfan Mubarak
The Al Jazira playmaker has for some time been tipped for stardom within UAE football, with Quique Sanchez Flores, his former manager at Al Ahli, once labelling him a “genius”. He was only 17. Now 23, Mubarak has developed into a crafty supplier of chances, evidenced by his seven assists in six league matches this season. Still to display his class at international level, though.
Rayan Yaslam
The Al Ain attacking midfielder has become a regular starter for his club in the past 15 months. Yaslam, 23, is a tidy and intelligent player, technically proficient with an eye for opening up defences. Developed while alongside Abdulrahman in the Al Ain first-team and has progressed well since manager Zoran Mamic’s arrival. However, made his UAE debut only last December.
Ismail Matar
The Al Wahda forward is revered by teammates and a key contributor to the squad. At 35, his best days are behind him, but Matar is incredibly experienced and an example to his colleagues. His ability to cope with tournament football is a concern, though, despite Matar beginning the season well. Not a like-for-like replacement, although the system could be adjusted to suit.
EMILY IN PARIS: SEASON 3
Created by: Darren Star
Starring: Lily Collins, Philippine Leroy-Beaulieu, Ashley Park
Rating: 2.75/5
'The worst thing you can eat'
Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.
Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines:
Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.
Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.
Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.
Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.
Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.
MATCH INFO
Euro 2020 qualifier
Norway v Spain, Saturday, 10.45pm, UAE
Indika
Developer: 11 Bit Studios
Publisher: Odd Meter
Console: PlayStation 5, PC and Xbox series X/S
Rating: 4/5
TOUR RESULTS AND FIXTURES
June 3: NZ Provincial Barbarians 7 Lions 13
June 7: Blues 22 Lions 16
June 10: Crusaders 3 Lions 12
June 13: Highlanders 23 Lions 22
June 17: Maori All Blacks 10 Lions 32
June 20: Chiefs 6 Lions 34
June 24: New Zealand 30 Lions 15
June 27: Hurricanes 31 Lions 31
July 1: New Zealand 21 Lions 24
July 8: New Zealand v Lions
The five pillars of Islam
AUSTRALIA SQUAD
Aaron Finch, Matt Renshaw, Brendan Doggett, Michael Neser, Usman Khawaja, Shaun Marsh, Mitchell Marsh, Tim Paine (captain), Travis Head, Marnus Labuschagne, Nathan Lyon, Jon Holland, Ashton Agar, Mitchell Starc, Peter Siddle