ETF Sponsor FaithShares To Charge Shareholders For July Closures

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June 14, 2011 1:11pm NYSE:FCV NYSE:FKL

Ron Rowland:  FaithShares has lost faith.  July 15, 2011 will be the last day of trading for four of the five FaithShares ETFs (Five Flavors of Faith in an ETF Format) launched in December 2009.  The lone survivor, FaithShares Christian Values Fund (FOC), will stay open even though it currently has

 less than $3 million in assets (6/13) and remains on ETF Deathwatch.  All five funds have been a part of ETF Deathwatch every month since July 2010, when they first became eligible.

Friday, July 15, will be the last day of trading for:

  • FaithShares Baptist Values Fund (FZB)
  • FaithShares Catholic Values Fund (FCV)
  • FaithShares Lutheran Values Fund (FKL)
  • FaithShares Methodist Values Fund (FMV)

I strongly urge all shareholders to sell their shares prior to the delisting.  These funds are thinly traded, and it is imperative that you use a limit order to get a good fill price on your transaction. 

FaithShares indicates the following timetable for closure and liquidation:

  • Last of trading is July 15
  • Portfolio liquidation July 20-27
  • Final Net Asset Value* determined July 27
  • Distribution at final N.A.V. on July 27

*Note:  The final Net Asset Value calculations will reflect the costs of closing the various funds.  Any and all shareholders that do not dispose of their shares prior to delisting on July 15 will bear the cost of closing the funds.

The prospectus supplement of May 27 tries to entice unwary investors into going through the liquidation process by stating that shareholders “will not be charged any transaction fees” by the funds that are closing.  However, they fail to inform you that the closings costs that you be saddled with will likely be much much larger than any broker’s transaction fee.

As per my disclosure below, I have entered buy orders for the closing ETF at prices below the current NAVs.  My reason for doing so is to take advantage of the thin trading and the fact that some shareholders will likely dump their shares without using a limit order.  I do not want you to be on the other side of the transaction, so be sure to use a limit order if you are selling.

Written By Ron Rowland From Invest With An Edge   No positions in any of the securities mentioned as of 6/13/11.  However, I have active buy orders with limits below current NAV for FZB, FCV, FKL, and FMV.

Ron Rowland is the founder of Invest With An Edge and serves as the Executive Editor. He is also editor of and Chief Investment Officer of Capital Cities Asset Management ( 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.

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