Markets

AdvisorShares To Close SSAM On Low Assets

AdvisorShares, the fund company that focuses exclusively on sponsoring active ETFs , is shutting the AdvisorShares Rockledge SectorSAM ETF (NYSEArca:SSAM), an equity fund designed to cherry-pick the most and least prospective sectors in a long/short strategy that neither performed well nor gathered many assets in its 18 months of existence.

The fund, which gathered just $1.19 million since its launch on Jan. 11, 2012, will stop trading on June 14, 2013 and its assets will be liquidated on or after June 21, the Bethesda, Md.-based company said in a press release.

Since inception, SSAM has fallen more than 6 percent-a striking performance considering broad indexing vehicles like the SPDR S&P 500 ETF (NYSEArca:SPY) are up more than 20 percent in the same time period.

The radically divergent returns speak to some extent of the difficulty that active management will have in making a pitch to take on index strategies. It's exactly what the numbers of indexing generally tell us; namely, that active strategies generally underperform index strategies, and that that underperformance becomes more pronounced over the arc of time.

In an even broader frame of reference, the closure of SSAM is emblematic of an ETF industry that is more keen on quickly pruning unsuccessful strategies than waiting for some corner to be turned that will never come to pass. That openness to throwing in the towel, in turn, reflects an industry that is maturing and has a better sense of what works-and what doesn't-relatively quickly.

ETF and ETN closures this year now total 40 funds-a healthy clip relative to most years in the industry's 20-year history, but a bit off last year's pace that led to more than 100 strategies shutting down.

Industry sources say ETF and ETN closures are a sign of a maturing industry, and that pruning unsuccessful strategies sets up the exchange-traded product industry for smoother long-term growth.

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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 Nasdaq, Inc.


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

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