ETF Providers

Hi John,

Some points below that are hopefully useful:

1. Fund closures are not uncommon in the US market and while there have been some ETF closures on the Australian Market, including by the three largest ETF managers Betashares, Vanguard and Blackrock, they still remain fairly rare.
2. In the case of delisting of an ETF, the fund will simply cease trading on a specific date and any remaining investors will be paid back the full value of their invested assets. The fund manager would notify investors in advance of the dates the fund would close trading and it being liquidated. Investors would be invited to sell their units on market during this notice period and if investors elect to hold a fund through to the time of delisting, they receive back their proportionate share of the fund’s assets at the time of liquidation.
3. It’s important to remember that all ETFs are regulated by ASIC under the Corporations Act 2001, as Registered Managed Investment Schemes. This means that all assets in the ETF are held on trust for the benefit of unitholders and do not form part of fund managers balance sheet. Assets are not available to creditors of the fund manager or any counterparty (including the custodian) in the event of their insolvency. As an extra layer of separation, fund assets are held in a ring-fenced account in the name of the relevant fund by an appointed third-party custodian.