So it's a shakeout of two minor players. Investment News has the story that Scottrade and Russell will be exiting the exchange traded fund business.
Scottrade's exit comes with a change in management. Its $100 million in FocusShares will cease trading on August 17 and liquidate. The funds had been introduced as a low cost provider, with expense ratios 1-2 basis points lower than Vanguard. However, the funds never gained enough investor interest to create critical mass and justify their existence, either as a loss leader or asset management product.
The Russell funds were designed to replicate active strategies through passive replication. The lineup included 26 funds which seemed to represent legitimate investment strategies. Only one of the funds is m ore than 15 months old, so it is difficult to tell how well the funds have been representing their strategies. Technically, Russell is conducting a strategic review, but IN is reporting that 30 related jobs have been cut. Perhaps another fund family will pick up the funds, one that already licenses Russell indexes, such as iShares or ProShares.
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