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ETF Advisors to Close Its Treasury ETFs

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ETF Advisors announced it would close its four Treasury FITR funds: Treasury 1 FITR (TFT), Treasury 2 FITR (TOU), Treasury 5 FITR (TFI), and Treasury 10 FITR (TTE).

"The ETF Advisors Trust Board of Trustees decided to close the funds in the best interest of the shareholders due to the small asset base of the funds and poor immediate prospects for growth of the funds," said the New York-based firm in a statement.

Trading in the funds on the American Stock Exchange will halt at the close of the U.S. stock market on May 21, 2003, according to ETF Advisors. From May 22-27, 2003, the funds will be liquidated, which will result in the funds not tracking their respective indexes and their cash holdings increasing. On May 27 the final NAV of the funds' shares, any capital gains and the dividend will be calculated. Shareholders remaining after May 21, 2003 will receive the Net Asset Value (NAV) of their shares as of May 27 (the record date) and any capital gains and dividends into the cash portion of their brokerage account on or about May 30, 2003.

The ETF Advisors FITRs funds were launched in November of 2002, about three months after Barclays Global Investors introduced the first bond ETFs (click here for an article that compared the two bond ETF families).

James Pacetti, president of consulting firm ETF International Associates, said the FITRs suffered from being second to market behind BGI's bond iShares. Pacetti also indicated that start-up ETF Advisors lacked the resources to compete in terms of marketing the funds. According to Morningstar, none of the four FITRs slated for closure had more than $20 million in assets.