Russell Investments said Friday that it will close all of its U.S. passively managed exchange-traded funds. The announcement came as the Seattle-based company reported just over $300 million in assets under management in the combined 25 funds.
The company said the action will occur on or before Oct. 24.
An ETF is generally considered to need $50 million in assets in order to be profitable. Russell averaged just over $12 million in each fund. The announcement does not include the Russell Equity ETF (ONEF), an actively managed fund that is benchmarked to the Russell Developed Large Cap Index.
Russell noted in its statement that while the products received substantial interest, the market for them “is still in its early days,” and blamed “challenging equity market conditions” since the launch of the products.
“The ETF universe has accumulated $1.2 trillion in assets, but the industry is still highly concentrated within the top three names, which hold over $1 trillion in assets,” Tom Lydon, president of Global Trends Investments, told AdvisorOne. “As such, smaller ETF providers, especially new entrants that are trying to carve out their spot in the market, have an extremely tough time.”