Tactical Alert: Adjusting to ETF / ETN Fund Closures

The market volatility this year has put to bed many levered funds. The investors, financial advisors and portfolio manager currently invested in those funds tend to wonder:

“How do you adjust your portfolio in the wake of these redemptions and still maintain the type of diversification you want?”

Other websites have documented these liquidations well:

• ETF.com Bloodbath In Leveraged ETFs
• Seeking Alpha: Direxion cuts leverage on 10 funds, closes eight funds

We will not go over the some of the more advanced topics such as:

• Rebalancing your portfolio when one of your funds closes
• Managing sudden capital gains distributions

I will walk through the top 9 recently closed funds here and document ETF / ETN alternatives that are not levered and haven’t closed yet.

Here’s and example of $100 of DVHL vs $100 of IYLD and $60 of MLPX

Clearly we can see the relative price of $DVHL as it underperforms IYLD and MLPX dramatically in the sell-off. Here’s a different view of the same price returns data above: the difference in returns of $IYLD and $MLPX vs $DVHL.

Look at our top 9 replacements for the levered funds which are closing / have closed

You can view each of these funds at https://app.portformer.com and sign up for a free 7-day trial

Consider $BIZD VanEck Vectors BDC Income ETF vs
$BDCL 2x Leveraged Wells Fargo Business Development Company ETN (CLOSED)

Consider $AOD & HPF Aberdeen Total Dynamic Dividend & John Hancock Preferred Income vs
$CEFL ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN (CLOSING Mar 27th)

Consider $TYO Direxion Daily 7-10 Year Treasury Bear 3X vs
$DLBS iPath US Treasury Long Bond Bear ETN (CLOSED)

Consider $IYLD & $MLPX Morningstar Multi-Asset Income Index ETF & Global X MLP & Energy Infrastructure ETF vs
$DVHL Monthly Pay 2xLeveraged Diversified High Income ETN (CLOSING)

Consider $UDOW & $UYG ProShares UltraPro Dow30 & ProShares Ultra Financials vs
$FINU ProShares UltraPro Financials (CLOSING)

Consider $RYU & $VTHR Invesco S&P 500® Equal Weight Utilities & Vanguard Russell 3000 vs
$HLDV ETRACS Monthly Pay 2xLeveraged US High Dividend Low Volatility ETN (CLOSING)

Consider $PSP & $VTHR Direxion Daily Mid Cap Bull 3X Shares & Invesco Global Listed Private Equity ETF vs
$LMLP ETRACS Monthly Pay 2xLeveraged Wells Fargo MLP Ex-Energy ETN (CLOSING)

Consider $SCHH Schwab US REIT ETF vs
$LRET Monthly Pay 2xLeveraged MSCI US REIT ETN (CLOSING)

Consider $REM iShares Mortgage Real Estate ETF vs
$MORL ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN (CLOSING)

Thank you for your time. Please click on the links above to explore the analysis directly in Portformer.