Factor Investing Strategy Briefing - Thursday 29th June 2023 - The Connaught, Mayfair. Please join us for our annual smart beta and factor investing event, featuring Goldman Sachs Asset Management, FlexShares, First Trust, MSCI and WisdomTree. Please register now if you would like to attend.
VanEck has announced it is closing two of its US-listed ETFs, comprising an equity thematic fund and an emerging market sovereign bond fund.
The ETFs will cease trading on NYSE Arca on 31 July 2018.
As of 31 July 2018, the VanEck Vectors Spin-Off ETF (SPUN US) and the VanEck Vectors EM Investment Grade+BB Rated USD Sovereign Bond ETF (IGEM US) will cease trading on NYSE Arca.
Shareholders who continue to hold the funds after this date are expected to receive liquidation proceeds around 7 August 2018.
SPUN tracks the Horizon Kinetics Global Spin-Off Index, an equal-weighted index composed of publicly held spin-off companies listed in developed markets. The event-driven strategy is based on the notion that recently spun-off firms exhibit value creation and an outperformance of their shares.
The theory states that spin-off companies should become more focused businesses with management dedicated to the new firm’s core operations. Investors can also value the company as a stand-alone business, avoiding the discount which is often applied when valuing less focused conglomerates.
SPUN failed to create buzz with investors and currently has just $5 million in assets under management.
Investors still wishing to partake in this investment approach may wish to consider the Invesco S&P Spin-Off ETF (CSD US) which tracks the S&P US Spin-Off Index and invests exclusively in US equities that have recently been spun-off. It has an expense ratio of 0.62%.
IGEM tracks the JP Morgan Custom EM Investment Grade Plus BB-Rated Sovereign USD Bond Index, composed of primarily investment grade US dollar-denominated bonds issued by emerging market governments.
It has larger than SPUN but with just $11.6m in assets it has also been slated for closure.
Investors may obtain similar exposure from a number of US-listed ETFs. The largest is the $12.4 billion iShares JP Morgan USD Emerging Markets Bond ETF (EMB US). Listed on Nasdaq Exchange, EMB tracks the JP Morgan EMBI Global Core Index and costs 0.39%.
Alternatively, the Vanguard Emerging Markets Government Bond ETF (VWOB US), which tracks the Bloomberg Barclays USD Emerging Markets Government RIC Capped Index, offers cheaper access with an expense ratio of 0.32%. It is also a fairly sizeable fun with $1.2bn in AUM.