FactorShares ETFs Dead As Of Market Close Thursday

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All five members of the FactorShares ETF family -- notorious for charging management expenses as high as 34% -- will officially pass through the pearly gates of ETF heaven when the stock market  closes Thursday.

The reason for the ETFs' demise: lack of investor interest.

The ETFs and their assets:

1. FactorShares 2x Oil Bull S&P 500 Bear ( FOL ): $748,000.

2. FactorShares 2x T-Bond Bull S&P 500 Bear ( FSA ): $560,000.

3. FactorShares 2x S&P 500 Bull T-Bond Bear ( FSE ): $1.25 million.

4. FactorShares 2x Gold Bull S&P 500 Bear ( FSG ): $2.22 million.

5. FactorShares 2x S&P 500 Bull USD Bear ( FSU ): $2.76 million.

Factor Capital Management of Delaware launched in the funds in February 2011 with an expensive annual management fee of 0.75% on the surface. But the footnotes deep in the prospectus disclosed they charged management fees and fund expenses ranging from 10% to 34% of assets.

The FactorShares ETF and the fees listed:

FSE: 33.70%

FSA: 27.48%

FSU: 17.66%

FOL: 25.22%

FSG: 9.68%

"Most investors are not aware of these exorbitant expenses because most ETF data sources incorrectly report the expense ratio as 0.75% and ignore the footnotes," Ron Rowland, founder of AllStarInvestor.com and president of Austin, Texas-based Capital Cities Asset Management with $25 million in assets, said in an email.

The FactorShares closures bring this year's total ETF deaths to 61, according to Rowland. That's much fewer than last year, when 92 were closed by November's end.

Follow Trang Ho on Twitter @IBD_THO .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs

Referenced Stocks: FOL , FSA , FSE , FSG , FSU

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