(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.
âWe are extremely pleased with the outcome, and feel that the
exchange offers have provided an important benefit to investors,â
Adam Phillips, managing directors of ETFs at Van Eck, said in a
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
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.
Â 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
âThese 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,â
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 wasnât immediately clear how many assets each of the new
ETFs will have upon their launch tomorrow.
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