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JCO To Close Due To Lack Of Assets

The graveyard of failed ETFs will get a bit bigger in the coming weeks as the JETS Contrarian Opportunities Index Fund (NYSEArca:JCO) shuts down, according to paperwork the ETF’s sponsor, Javelin Funds, submitted to U.S. regulators. Javelin’s only remaining ETF had gathered few assets.

The fund, which came to market in April 2007, had just over $5.5 million in assets as of yesterday, according to data compiled by IndexUniverse. It will stop trading Sept. 28 and be closed to new investors on Sept. 29. Investors remaining in the fund on Oct. 11 will have their shares redeemed at the net asset value of the shares on that day, the company said in a supplement to JCO’s prospectus.

“The Board of Trustees, after careful consideration, has determined to close the JETS Contrarian Opportunities Index Fund,” the company said in the paperwork dated Sept. 13 that it submitted to the Securities and Exchange Commission.

JCO’s closure will be the first ETF to shut since the executives behind FaithShares threw in the towel on the firm’s five funds earlier this summer and turned their attention to their new venture, Exchange Traded Concepts, which will help others bring ETFs to market.

If a recent McKinsey ' Co. study turns out to be on the mark, the pace of ETF shutdowns is likely to accelerate as the competitive landscape in the exchange-traded fund industry grows more intense. McKinsey said that between 2000 and 2007, just 10 ETFs were shuttered. In the next three years, more than 150 were shut down.

Almost exactly a year ago, Javelin said it was shuttering its JETS Dow Jones Islamic Market International Index Fund, saying at the time in a press release that while it still thought the Muslim-specific investment market was prospective, it had had difficulty getting the word out through “marketing channels typically used by ETFs.”

The shutdown of the Muslim fund followed by a day an announcement by Geary Advisors that it was closing two of its funds and exiting the ETF business.

Those closings put the industry on pace to shutter at least 40 funds by the end of 2010. Grail Advisors closed two of its actively managed ETFs in August 2010, while Guggenheim predecessor firm Claymore shut down four funds about a year ago.



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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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