Russell terminates passive ETFs to focus on active asset allocation ETFs

Aug 20th, 2012 | By | Category: ETF and Index News

Following a strategic review conducted earlier this month, Russell Investments has formally announced the termination and liquidation of the company’s US passively managed family of exchange-traded funds (ETFs).

Russell terminates passive ETFs to focus on active asset allocation ETFs

Russell will continue to focus on offering solutions in the actively managed, asset allocated ETF space.

The affected funds – 25 in total, with approximately $310 million in assets as of July 31, 2012 – will be delisted at the close of trading on October 16, 2012 and fully wound up on or before October 24, 2012.

The announcement does not impact the Russell Equity ETF (ONEF), which is an actively managed, asset allocated portfolio that aligns with Russell’s focus on multi-asset solutions. Russell will continue to operate ONEF, which is benchmarked to the Russell Developed Large Cap Index.

ONEF is a “fund of funds” investing primarily in shares of other ETFs. The fund utilises an asset allocation strategy and normally invests in unaffiliated ETFs that seek to track various indices. The fund provides investors with exposure to a broad mix of stock investments across market capitalisation ranges in a variety of domestic and foreign markets.

Recognising the role that ETFs can play in an investment portfolio, Russell will continue to focus on offering solutions in the actively managed, asset allocated ETF space as part of its core capability in investment strategy implementation as well as in the passive ETF space through its index licensing business.

Indeed, Russell remains the underlying index provider for many ETFs around the world, which have more than $80 billion in assets under management, and has vowed to continue its partnership with all of its ETF sponsor clients.

While the innovation behind Russell’s next-generation ETF products received substantial interest in general, the market for them is still in its early days. Russell determined, therefore, that, given the challenging equity market conditions since the launch of these products, proposing the liquidation of the passively managed ETFs at this time is in the best interests of the ETFs and their shareholders.

The decision by Russell follows a similar move from FocusShares, an affiliate of Scottrade, which, earlier this month, announced the closure of its entire ETF range after managing to accumulate only approximately $100 million in assets since launch. [See Russell and FocusShares signal retreat, while Direxion, Lyxor and Horizons announce specific ETF closures]

The FocusShares board cited “current market conditions, the inability of the funds to attract significant market interest since their inception, and their future viability as well as prospects for growth in the funds’ assets in the foreseeable future” as reasons for their closure.

Russell ETFs to be discontinued Ticker Exchange
Russell 1000 High Beta ETF HBTA NYSE Arca
Russell 1000 Low Beta ETF LBTA NYSE Arca
Russell 1000 High Volatility ETF HVOL NYSE Arca
Russell 1000 Low Volatility ETF LVOL NYSE Arca
Russell 1000 High Momentum ETF HMTM NYSE Arca
Russell 2000 High Beta ETF SHBT NYSE Arca
Russell 2000 Low Beta ETF SLBT NYSE Arca
Russell 2000 High Volatility ETF SHVY NYSE Arca
Russell 2000 Low Volatility ETF SLVY NYSE Arca
Russell 2000 High Momentum ETF SHMO NYSE Arca
Russell Developed ex-US Low Beta ETF XLBT NYSE Arca
Russell Developed ex-US Low Volatility ETF XLVO NYSE Arca
Russell Developed ex-US High Momentum ETF XHMO NYSE Arca
Russell Aggressive Growth ETF AGRG NYSE Arca
Russell Consistent Growth ETF CONG NYSE Arca
Russell Contrarian ETF CNTR NYSE Arca
Russell Equity Income ETF EQIN NYSE Arca
Russell Growth at a Reasonable Price ETF GRPC NYSE Arca
Russell Low P/E ETF LWPE NYSE Arca
Russell Small Cap Aggressive Growth ETF SGGG NASDAQ
Russell Small Cap Consistent Growth ETF SCOG NASDAQ
Russell Small Cap Contrarian ETF SCTR NASDAQ
Russell Small Cap Low P/E ETF SCLP NASDAQ
Russell High Dividend Yield ETF HDIV NYSE Arca
Russell Small Cap High Dividend Yield ETF DIVS NYSE Arca

 

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