Sections
Grail Shuts Down Two Funds
August 23, 2010 6:41 am
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Grail Advisors will shut down two of its seven exchange-traded funds, as it looks to streamline its product lineup and focus its resources on other funds. The purveyor of actively managed ETFs will shutter the Grail RP Financials (NYSEArca: RFF) and Grail RP Technology (NYSEArca: RPQ) ETFs prior to the market-open on Monday, Aug. 30. Shareholders will be redeemed for cash on Tuesday, Aug. 31. The funds were managed by RiverPark Capital. "By all appearances, the marketplace is not ready for these sector funds. We've been pleased with the performance of the RP Technology ETF but flows have still been disappointing," said Morty Schaja, CFA, CEO, and managing partner at RiverPark Capital, in a statement. Grail Advisors and RiverPark Capital will cover all costs associated wtih closing the ETFs. Grail has struggled to attract assets to its products, as investors have been slow generally to embrace actively managed funds. None of the firm’s ETFs has more than $10 million in assets under management.
(Funds highlighted in red will be closed as of Aug. 30, 2010.)
ETF fund closures have picked up recently. Claymore Advisors announced last week that it would close four ETFs, with a combined $35 million in assets. Fund closures carry some risks for investors. Investors who hold products through the closure period are redeemed at cash. As a fund sells its last positions, it has the potential to realize capital gains if any of the positions have appreciated. Any gains are then distributed along with the cash proceeds to redeeming investors. That seems unlikely for RFF and RPX, however, as the market has been trending down recently. |
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