IndexIQ, the Rye Brook, New York-based fund provider known for its hedge-fund replication strategies, on Dec. 23 is shuttering three ETFs focused on Asian equities that struggled to attract enough assets.
The funds it will close on Friday and their assets, as of Dec. 16 are:
- IQ Hong Kong Small Cap ETF (NYSEArca:HKK), $1.38 million, launched in May 2011
- IQ Taiwan Small Cap ETF (NYSEArca:TWON), $2.01 million, launched in May 2010
- IQ Japan Mid Cap ETF (NYSEArca:RSUN), $1.84 million, launched in June 2011
The three ETFs are each one-of-a-kind strategies, as they are the only ETFs on the market today that provide focused exposure to the small- and midcap segments of Hong Kong, Taiwan and Japan equities, respectively. But that wasnât enough to bring in assets at a time when China and other parts of Asia are out of favor with U.S. investors.
The ETFs being shuttered are the latest to join a slew of funds that closed this year, the most recent being two commodities-related Jefferies ETFs that will delist Wednesday. Funds from Direxion, Javelin Funds and FaithShares have also been shut down this year. According to a study by McKinsey, the rate of ETF shutterings is likely to accelerate as the industry matures.
All three IndexIQ ETFs had been scoring in a mid-to-somewhat-elevated range in terms of closure risk in the ETF rating system developed by IndexUniverseâs Analytics team. TWON scored the highest in terms of closure risk.
How Delisting Will Happen
Shareholders remaining on Dec. 29 will receive cash at the net asset value of their shares, including any capital gains and dividends as of such date.
No transaction fees will be assessed in connection with the liquidation.
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