From the October 2010 issue of Research Magazine • Subscribe!

Grail Liquidates Sector ETFs

Plug pulled on niche ETFs while new products introduced.

Grail Advisors pulled the plug on the RP Technology ETF (RPQ) and RP Financials ETF (RFF) because of a lack of investor interest. Both funds were actively managed sector equity ETFs with a promising future, but weren't able to attract enough assets to survive.

"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," says Morty Schaja, CFA, CEO and managing partner at RiverPark Capital.

Grail will continue to oversee the management of five other actively managed ETFs including one all-cap U.S. growth equity fund managed by RiverPark Capital.

The board of directors of the Grail Advisors ETF Trust approved the closures at its Aug. 20, 2010 meeting.

"Our goal is to bring investors a full complement of traditional, active fund managers and strategies to the ETF marketplace," says William M. Thomas, CEO of Grail Advisors LLC. "With this move, we are dedicating our resources to the areas of most interest to investors, including the introduction of several exciting new funds in the coming months that will have broad appeal in the marketplace."

Trading in both funds ceased on August 30, 2010.

In other news, Claymore Securities folded four ETFs in September: the Claymore/Zacks Dividend Rotation ETF (IRO), Claymore/Zacks Country Rotation ETF (CRO), Claymore/Beacon Global Exchanges, Brokers & Asset Managers Index ETF (EXB) and the Claymore/Robb Report Global Luxury Index ETF (ROB).

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