Today, Financial Advisor's Jeff Schlegel takes a close look at the recent wave of ETF closures. He concludes that these closings are a sign of a healthy industry -- a "pruning of dead wood."

Following the announcements this summer by Direxion, Russell, and FocusShares that they plan to close down or scale back their ETF lines, Schlegel wonders if this represents a "wholesale future retrenchment" of the business.

Nope, Ron Rowland tells him. He writes a column called "ETF Deathwatch" for his website Invest With An Edge, and he sees these closures as a healthy part of the industry's evolution, saying that they "tend to come in waves."

And Todd Rosenbluth, ETF analyst with S&P Capital IQ, says that some of the closed funds were redundant. "Russell's ETFs were competing against ETFs they were supporting," he told Schlegel.

Another indicator of the long-run health of the business is that the big three ETF sponsors, BlackRock, State Street and Vanguard, haven't closed any ETFs -- in fact, BlackRock has been launching new products.  

Edited by: Chris Cumming


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