HOLDRs Transfer to ETFs Called "Successful”

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(Story recasted; updated throughout.)

The process designed to change six HOLDRS securities into ETFs sponsored by Van Eck ended with 70 percent of the assets in the HOLDRS, or $2.3 billion, accepted into the Market Vectors ETF Trust. Van Eck called the exchanges "successful," and said the entire plan will culminate with the launch of the new ETFs tomorrow on Wednesday, Dec. 21.

Earlier on Tuesday, the New York Stock Exchange halted trading in the six HOLDRS for news pending, a move that was expected since Van Eck had said the funds were likely to be halted on the day the exchange offers expired. Van Eck said in a press release all terms and conditions for each of the six exchange offers.

“We are extremely pleased with the outcome, and feel that the exchange offers have provided an important benefit to investors,” Adam Phillips, managing directors of ETFs at Van Eck, said in a press release.

The six HOLDRs involved in the exchange, and the percentage of each that was tendered are as follows:

  • Oil Service HOLDRS (NYSEArca:OIH), 60.71 percent
  • Semiconductor HOLDRS (NYSEArca:SMH), 71.02 percent
  • Pharmaceutical HOLDRS (NYSEArca:PPH), 70.20 percent
  • Biotech HOLDRS (NYSEArca:BBH), 63.69 percent
  • Retail HOLDRS (NYSEArca:RTH), 57.34 percent
  • Regional Bank HOLDRS (NYSEArca:RKH), 74.52 percent

The transfer offering is one more sign that the ETF juggernaut is gathering steam. As of Dec. 19, investors had almost $1.027 trillion allocated to various U.S.-listed ETFs. Inflows into ETFs have outpaced those into any other investment vehicle as investors become more familiar with the benefits of the ETF structure.

HOLDRs, on the other hand, have had their day. The funds, which are holding company depositary receipts Merrill launched in the late 1990s and early 2000s, are narrowly focused portfolios that, once created, never changed. They are exchange traded like ETFs, but that set-and-forget aspect has made them increasingly irrelevant as the markets have evolved and companies have come and gone.

As of the beginning of this month, the six HOLDRs had more than $3.5 billion in assets, with the Oil Services HOLDRs (NYSEArca:OIH) the biggest on them all with more than $2 billion in assets.  The six HOLDRS involved in the transaction make up around 90 percent of all the assets of the 17 HOLDRs originally rolled by Merrill Lynch. Merrill has said previously it would shutter the 11 remaining HOLDRS.

“These funds are a great addition to the Van Eck platform and, particularly in the case of OIH, a natural extension of the kinds of products with which we have historically been associated,” Phillips said in the press release, referring to Van Eck's longstanding reputation as a money manager with expertise in natural resources investing.

The New ETFs

Arca first said late on Monday evening that the six securities would be relaunched on Wednesday, Dec. 21, as Van Eck ETFs.

Arca said the securities, which will retain their existing tickers, will be called:

  • Market Vectors Biotech ETF (NYSEArca:BBH)
  • Market Vectors Bank and Brokerage ETF (NYSEArca:RKH)
  • Market Vectors Oil Services ETF (NYSEArca:OIH)
  • Market Vectors Pharmaceutical ETF (NYSEArca:PPH)
  • Market Vectors Retail ETF (NYSEArca:RTH)
  • Market Vectors Semiconductor ETF (NYSEArca:SMH)

It wasn’t immediately clear how many assets each of the new ETFs will have upon their launch tomorrow.

Don't forget to check IndexUniverse.com's ETF Data section.

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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: BBH , OIH , PPH , RKH , RTH

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