Following a strategic review, Russell Investments has formally announced the termination and liquidation of the company’s US passively managed family of exchange-traded funds (ETFs). Russell will continue to focus on offering solutions in the actively managed, asset allocated ETF space, including maintaining the Russell Equity ETF (ONEF), as part of its core capability in investment strategy implementation as well as in the passive ETF space through its index licensing business.

Two relative newcomers to the US ETF game, Russell Investments and FocusShares, have signalled their retreat, reflecting the intense competitive pressures within the US market as ETF giants iShares, SPDR and Vanguard monopolise inflows. Meanwhile, elsewhere, US-based Direxion, Europe-based Lyxor and Canada-based Horizons have announced the pending closure or delisting (of secondary listings) of some of their less popular funds.

The liquidity and marketability of ETFs are still widely misunderstood by professional and individual investors, said Erik Liik, president and CEO of FocusShares, in a statement. Liik points to a survey conducted for Cerulli Associates which found that nearly 70% of ETF sponsors said misunderstandings about liquidity and trading volume hindered potential sales. The Cerulli report notes that investors are “falsely weary” that the association between volume and liquidity “will hinder their ability to move large positions in and out of funds with low volume.”

In the race to gather assets, US ETF providers continue to lower fees. In December, Vanguard lowered the expense ratio on a range of sector ETFs. That was followed in February by SSgA announcing a fee reduction across its Select Sector SPDR range. Then, late last week, Vanguard came back and again cut fees across a swathe of its ETF portfolio. Today it’s been the turn of Van Eck Global. While in the meantime, Charles Scwab and FocusShares have been competing aggressively with a zero-commission promotion.