Guggenheim Exits Leveraged and Inverse ETF Biz
Ron Rowland: Guggenheim recently announced the closure of nine ETFs. The last day of trading will be this Friday, March 15. Liquidation values will be determined on March 21 and will reflect expenses encountered in the closing of the ETFs. It is therefore imperative that shareholders follow the Five Steps to Avoid Disaster When Your ETF Closes and sell your holdings by March 15.
The liquidating funds are:
- Guggenheim 2x S&P 500 (RSU)
- Guggenheim Inverse 2x S&P 500 (RSW)
- Guggenheim ABC High Dividend (ABCS)
- Guggenheim Airline (FAA)
- Guggenheim MSCI EAFE Equal Weight (EWEF)
- Guggenheim S&P MidCap 400 Equal Weight (EWMD)
- Guggenheim S&P SmallCap 600 Equal Weight (EWSM)
- Wilshire 4500 Completion (WXSP)
- Wilshire 5000 Total Market (WFVK)
The closure of Guggenheim 2x S&P 500 (RSU) and Guggenheim Inverse 2x S&P 500 (RSW) marks the exit of Guggenheim (and the former Rydex ETF lineup) from the leveraged and inverse ETF business. Guggenheim is now completely ceding the space to ProShares and Direxion. This is significant because Rydex was first to market a leveraged fund back in 1993with the introduction of Rydex Nova (RYNVX). At one time, Rydex had 14 leveraged and inverse ETFs, closing all but two of them in May 2010. Rydex has gone through a couple of ownership changes the past few years, and all Rydex ETFs were migrated to the Guggenheim brand a year ago. The mutual fund space is a different story, where Guggenheim still employs the Rydex brand. Today, there are two dozen leveraged and inverse mutual funds adorned with the Rydex name.
Closure of Guggenheim Airline (FAA) comes somewhat as a surprise. Volume is decent (and has picked up significantly the past month), assets continue to grow since the closure was announced (and now stand at $23 million), and the ETFs only competitor closed in October 2011. Perhaps investors do not realize the fund is closing this week, but they will soon know.
Wilshire 4500 Completion (WXSP) and Wilshire 5000 Total Market (WFVK) do not officially include “Guggenheim” as part of their names, being called “Wilshire” ETFs instead. The reason for this was never made clear, but the closures of WXSP and WFVK leaves only Wilshire Micro Cap (WMCR) and Wilshire U.S REIT (WREI) in that predicament.
These nine funds will bring the year-to-date closure count to 28, which is on a pace to exceed last year’s record of 102 closures.
Ron Rowland is the founder of Invest With An Edge and serves as the Executive Editor. He is also editor of AllStarInvestor.com and Chief Investment Officer of Capital Cities Asset Management (www.ccam.com). Quoted widely in the financial media, Ron is the industry go-to guy for sector rotation insight and investment strategies using ETFs and mutual funds.