Does anyone know how is the process of a etf liquidation?
http://investwithanedge.com/etf-deathwatch-–-february-2009
http://investwithanedge.com/etf-deathwatch-–-february-2009
ETF Deathwatch
- Thread starter Daal
- Start date
Many are realizing that first to market in the ETF space is key. Secondly, many ETNs are having trouble because an ETN is a debt instrument which factors in the credit worthiness of the issuer so when banks like Barclays start having problems or being questioned their ETNs are also under the same scruteny.
This is nothing new though. If you remove the Barclay's ETNs and Northern Trust ETFs the list is substancially smaller.
This is nothing new though. If you remove the Barclay's ETNs and Northern Trust ETFs the list is substancially smaller.
tradersboredom
Guest
most ETF are illiquid untradeable uninvestable
Quote from nazzdack:
1) How many different ways can you dice and slice the S&P-500?
2) It would really be neat if there were ETF's that were highly concentrated in one "expensive" stock, such as BRKA, BRKB, GOOG or CME for the odd-lotters.
I swore off of ETFs after my stake in DCR went to zero last summer. I was betting on a drop in oil prices, but the fund liquidated just before oil prices plunged. It was my fault for not studying the bylaws of the fund in detail......but I don't want to have to do that in the future. So, I am sticking with plain old stocks and commodities. Stosh
tradersboredom
Guest
basically you got ripped off.
these ETF are just covers to take your money these ETF's are derivatives and high leveraged.
these ETF are just covers to take your money these ETF's are derivatives and high leveraged.
wow guys... do you believe in voo-doo and witch craft too?
Nazzdak - first to market is key meaning... Look at Q's, Spiders, etc. the first guys to get into index-based ETFs (non-leveraged) made a killing, many followed but no one can even come close.
Look at ProShares with 2x (Ultras), first to market 2xetfs, they make a killing, (while techniclly Rydex did offer 2xetfs first, ProShares got it right), no one can come close to the 2x ETF market that Pro has.
3xetfs launch... shortly thereafter ProShares filed for 3xetfs as well - rumor (not credible, etc.) is that Pro isn't going to bother launching thier 3x products because #1, they don't want to pirate their 2x business and #2, the market space isn't big enough for the added etfs. (again, this is rumor, unconfirmed, but seems to be holding up)
Its not about how many different ways to be first to market trying to twist up the S&P - its even more basic, first 1x (non-leveraged) wins, and so on. As for the "expensive" stock ETF, if there is an index of "expensive stocks" then its possible.
tradersboredom - not really sure what you are talking about, many ETFs are thinly traded, considered illiquid, but are still very tradable (untradable to me means not available to trade) and they are certanly investable.
Stosh - Don't know anything about DCR, was it an ETF or an ETN? I can't find any info on it so I can't even comment - ETFs all have an underlying basket of stocks that back up the secondary market share price - unless that basket goes to $0 you should not ever see the ETF share price go to $0 - its just not possible with the way they work, unless they were very poorly managed, or as I stated above, an ETN.
boredom - i don't think you understand ETFs at all. not all ETFs are leveraged, not all ETFs use derivitives - its just not true. Read the prospectus of the ETF you are interested in and see if the fund manager is allowed to use derivitives or leverage - I'd bet that you'll find over 90% of ETFs on the market are not allowed to go above 100% exposure (non-leveraged) so at that point derivatives are expensive and not needed.
Daal - to answer more of your question. An ETF would liquidate just as a mutual fund would liquidate. The fund manager would announce that as of X date the ETF would no longer be available for new/additional purchases (meaning the market makers would purchase back all shares), around the same time they would most probably also put out disclosure language stating that the ETF may no longer seek its target investment objective. Once secondary market shareholders have the opportunity to redeem/sell, the market makers would turn in the secondary market shares to the fund manager for the basket of stocks (or cash) that represent the underlying securities. At this time, if you did not sell prior, your shares would be liquidated by your broker and cash value for the share would be put in your account.
I can't stress this enough - ETFs hold an underlying basket of securities which have value, unless the underlying securities go to $0 the ETF will not lose value, your money will not be taken, there is no black magic or whatever - its very straightforward.
ETN's are a different story.
Nazzdak - first to market is key meaning... Look at Q's, Spiders, etc. the first guys to get into index-based ETFs (non-leveraged) made a killing, many followed but no one can even come close.
Look at ProShares with 2x (Ultras), first to market 2xetfs, they make a killing, (while techniclly Rydex did offer 2xetfs first, ProShares got it right), no one can come close to the 2x ETF market that Pro has.
3xetfs launch... shortly thereafter ProShares filed for 3xetfs as well - rumor (not credible, etc.) is that Pro isn't going to bother launching thier 3x products because #1, they don't want to pirate their 2x business and #2, the market space isn't big enough for the added etfs. (again, this is rumor, unconfirmed, but seems to be holding up)
Its not about how many different ways to be first to market trying to twist up the S&P - its even more basic, first 1x (non-leveraged) wins, and so on. As for the "expensive" stock ETF, if there is an index of "expensive stocks" then its possible.
tradersboredom - not really sure what you are talking about, many ETFs are thinly traded, considered illiquid, but are still very tradable (untradable to me means not available to trade) and they are certanly investable.
Stosh - Don't know anything about DCR, was it an ETF or an ETN? I can't find any info on it so I can't even comment - ETFs all have an underlying basket of stocks that back up the secondary market share price - unless that basket goes to $0 you should not ever see the ETF share price go to $0 - its just not possible with the way they work, unless they were very poorly managed, or as I stated above, an ETN.
boredom - i don't think you understand ETFs at all. not all ETFs are leveraged, not all ETFs use derivitives - its just not true. Read the prospectus of the ETF you are interested in and see if the fund manager is allowed to use derivitives or leverage - I'd bet that you'll find over 90% of ETFs on the market are not allowed to go above 100% exposure (non-leveraged) so at that point derivatives are expensive and not needed.
Daal - to answer more of your question. An ETF would liquidate just as a mutual fund would liquidate. The fund manager would announce that as of X date the ETF would no longer be available for new/additional purchases (meaning the market makers would purchase back all shares), around the same time they would most probably also put out disclosure language stating that the ETF may no longer seek its target investment objective. Once secondary market shareholders have the opportunity to redeem/sell, the market makers would turn in the secondary market shares to the fund manager for the basket of stocks (or cash) that represent the underlying securities. At this time, if you did not sell prior, your shares would be liquidated by your broker and cash value for the share would be put in your account.
I can't stress this enough - ETFs hold an underlying basket of securities which have value, unless the underlying securities go to $0 the ETF will not lose value, your money will not be taken, there is no black magic or whatever - its very straightforward.
ETN's are a different story.
Winstontj: Macroshares had etfs with symbols DCR (down crude) and UCR (up crude) last year that shared in a pool of money. There was a formula under which they divided the fund between the two. As crude went up UCR gained and when crude went down DCR gained. Well, crude went up so high that UCR had all the fund, and their rules dictated that the fund had to close and give all the money to the holders of UCR. If that hadn't occurred, a few months later DCR would have gotten all the money. The information was available, but it seems most investors didn't understand the rules......as I suspect is the situation with some other current ETFs. Stosh