Scottrade to Liquidate FocusShares ETFs

Discount broker Scottrade announced it will liquidate all 15 ETFs sponsored by its FocusShares unit because the funds failed to attract sufficient assets under management. The 15 Funds, which were launched in March 2011, had approximately $100 million in aggregate assets as of July 31, 2012, according to a statement issued by FocusShares. FocusShares ETFs will cease trading on August 17 and will be closed to new investment on August 20. All 15 funds have traded on the New York Stock Exchange. The affected ETFs are as follows: Focus Morningstar US Market ETF FMU, Focus Morningstar Large Cap ETF FLG, Focus Morningstar Mid Cap ETF FMM, Focus Morningstar Small Cap ETF FOS, Focus Morningstar Basic Materials ETF FBM, Focus Morningstar Communications Services ETF FCQ, Focus Morningstar Consumer Cyclical ETF FCL, Focus Morningstar Consumer Defensive ETF FCD, Focus Morningstar Energy ETF FEG, Focus Morningstar Financial Services ETF FFL, Focus Morningstar Health Care ETF FHC, Focus Morningstar Industrials ETF FIL, Focus Morningstar Real Estate ETF FRL, Focus Morningstar Technology ETF FTQ and the Focus Morningstar Utilities ETF FUI. The failure of the FocusShares ETF suite may surprise some investors, as the ETFs were available on a commission-free basis to Scottrade clients and charged competitive fees. For example, the FocusShares sector funds charge 0.19 percent per year, which is in-line with rates for comparable Vanguard ETFs and close to the 0.18 percent per year charged by the Select Sector SPDRs. The Focus Morningstar Technology Index ETF gained some acclaim for its relatively large weighting to Apple AAPL. Apple currently accounts for almost 21 percent of that ETF's weight. Scottrade's announcement to close FocusShares funds is the second wave of significant ETF closure news in less than a week. On August 3, Direxion announced it will shutter nine of its leveraged products due the funds' inability to attract sufficient assets.