Two ETF players call it quits

Scottrade, Russell out of the pool; FocusShares failed to gain investors' focus
AUG 07, 2012
By  John Goff
Scottrade Inc. and Russell Investments are both exiting the exchange-traded-fund business. Scottrade on Tuesday — less than a week after naming a new chief executive —announced that it will liquidate its lineup of exchange-traded funds. The 15 FocusShares ETFs, which have approximately $100 million in assets, will cease trading Aug. 17, according to a press release. Scottrade replaced founding CEO Erik Liik effective July 30. Scott Golde, an associate general counsel at the firm, was named his replacement. Jack Naudi, spokesman, declined to say whether Mr. Golde had been brought in specifically to close the ETFs. Scottrade attempted to capitalize on investor's infatuation with low-cost funds by offering the lowest-cost ETFs; but despite undercutting The Vanguard Group Inc., an investor favorite, by 1 or 2 basis points on several core equity ETFs, the funds never really caught on. The board of directors for the FocusShares ETFs cited the inability of the ETFs to attract “significant market interest” and the lack of future viability as the reasons for the liquidation, according to a released statement. Meanwhile, Russell Investments released a statement on its website late Monday announcing that it had undertaken a “strategic review” of its ETF business. A Bloomberg report added that Russell will be cutting approximately 30 jobs in New York and San Francisco as a result. Rather than try to compete on cost in the crowded area of core equity or bond products, Russell focused on what it called “second generation” ETFs. The ETFs, such as the Russell Growth at a Reasonable Price ETF (ticker: GRPC), attempted to replicate popular investment strategies passively. Steve Claiborne, spokesman for Russell, declined to comment beyond the announcement.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.