January witnessed 13 ETF launches along with the closure of four ETFs and one ETN, putting the new count at 1,853 (1,653 ETFs and 200 ETNs).  The net increase of eight might seem like a slow pace of product introductions, but it is much better than a year ago when the 23 closures swamped the 13 launches.Assets fell 4.5% during January but remain above the $2 trillion mark for now.The quantity of actively managed ETFs dropped from 137 to 134, yet assets grew 4.3%.

If 2015 was the year of currency hedging, then 2016 could be the year of “managed” currency hedging.On a single day in January, two firms introduced seven next-generation currency-hedged ETFs employing “Currency Hedging 2.0” techniques.WisdomTree calls its new hedging approach “Dynamic,” while iShares chose the “Adaptive” moniker.Despite these slight naming differences, both firms employ a similar process for managing currency exposure based on changing market conditions.

The iShares methodology uses four indicators: interest-rate differential, relative valuation, momentum, and volatility.Each indicator controls a 25% increment of each currency being hedged.The WisdomTree approach also uses interest-rate differential, relative valuation, and momentum factors, but does not use a volatility factor.Each indicator controls one-third of each currency’s exposure, and the relative valuation hedge is applied in two 16.7% increments.Both methodologies are likely to be popular with retail investors who do not want to manage their own level of currency hedging.I expect more of these next-generation currency-hedged ETFs to roll out in the months ahead.

Three ETNs had early terminations in January.The CS X-Links Commodity Benchmark ETN (CSCB) was the result of Credit Suisse voluntarily exercising its option to accelerate (“call”) the notes prior to their 2033 maturity.UBS ETRACS 2xMonthly Leveraged Alerian MLP Infrastructure Index ETN (MLPL) and UBS ETRACS 2xMonthly Leveraged S&P MLP Index ETN (MLPV) triggered mandatory acceleration and redemptions due to adverse market conditions on January 20.Anti-ruin triggers are needed for these products because they reset leverage monthly instead of daily.Although the two triggers were independent, they both occurred on the same day during a sell-off in the MLP market.The two ETRACs products were still listed as the month came to a close, so they will not show up as closures until February.

The quantity of funds with more than $10 billion in assets held steady at 51 for January.The number of products with at least $1 billion in assets decreased from 256 to 243.The median asset level is just $61.4 million, which is a level some analysts considered to be unprofitable.  Trading activity jumped 16.7% for the month to $2.17 trillion.This represents a 107% turnover ($ volume / industry assets) for the month.

January 2016 Month End ETFs ETNs Total Currently Listed U.S. 1,653 200 1,853 Listed as of 12/31/2015 1,644 201 1,845 New Introductions for Month 13 0 13 Delistings/Closures for Month 4 1 5 Net Change for Month +9 -1 +9 New Introductions 6 Months 130 7 137 New Introductions YTD 13 0 13 Delistings/Closures YTD 4 1 5 Net Change YTD +9 -1 +9 Assets Under Mgmt ($ billion) $2,003 $20.2 $2,023 % Change in Assets for Month -4.5% -5.9% -4.5% % Change in Assets YTD -4.5% -5.9% -4.5% Qty AUM > $10 Billion 51 0 51 Qty AUM > $1 Billion 239 4 243 Qty AUM > $100 Million 761 34 795 % with AUM > $100 Million 46.0% 17.0% 42.9% Monthly $ Volume ($ billion) $2,0736 $98.5 $2,171 % Change in Monthly $ Volume +16.1% +33.1% +16.7% Avg Daily $ Volume > $1 Billion 14 1 15 Avg Daily $ Volume > $100 Million 114 6 120 Avg Daily $ Volume > $10 Million 358 12 370 Actively Managed ETF Count (w/ change) 134 -3 mth -3 ytd Actively Managed AUM ($ billion) $23.9 +4.3% mth +4.3% ytd
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