Five New ETFs That May Not Make It

As of Aug. 12, 206 new exchange traded products had come to market this year and six had closed, according to data from Morningstar. Nearly six weeks later, both numbers are slightly higher and while the pace of closures has picked a bit, it seems unlikely that the ETF industry will see 54 closures this year. That's average of the past three years. Still, with over 200 new funds already launched this year and presumably more on the way, it's reasonable to expect not all will be winners. We're not just talking performance, either. Pivotal to new ETF's success is its ability to attract and maintain a robust flow of assets and generate decent average daily volume. Those tasks are easier said than done for plenty of ETFs, new or old, and there are a few newbies that already look like they won't be with us for too long. Here are five new ETFs and ETNs that are struggling since their debuts. iPath Pure Beta Aluminum ETN (NYSE: FOIL): FOIL made its debut in late April and has attracted $3.8 million in AUM in that time. Not terrible, but not great either. The problem here is volume. FOIL's 20-day average turnover is five, according to the iPath Web site. The iPath Pure Beta Industrial Metals ETN (NYSE: HEVY), the iPath Pure Beta Copper ETN (NYSE: CUPM) and FOIL saw this much combined volume in June: Zero. That's according to SmartMoney. Add CUPM and HEVY to this list and we actually have six ETPs that may not survive for the long-term. FirstTrust Mega-Cap AlphaDEX Fund (NYSE: FMK): The FirstTrust Mega-Cap AlphaDEX Fund made its debut in late May has garnered $3.4 million in AUM. FMK's problem isn't that the idea isn't sound. It is. The main issue is that there are plenty of other ETFs like this out there with expense ratios well below 0.7%. Paring those fees could be a boon for FMK. ProShares Hedge Fund Replication ETF (NYSE: HDG): Issuers that focus on inverse and leveraged ETFs can sometimes find their forays into plain vanilla ETFs are harder than expected and that may be the case here. We're willing to give HDG some benefit of the doubt as it's barely two months old, but average daily volume of just 600 shares and an expense ratio of 0.95% is a toxic combination. iPath Seasonal Natural Gas ETN (NYSE: DCNG): This ETN has attracted $5.4 million in AUM and trades nearly 1,600 shares per day on average. Not bad considering the late April debut, but the thirst for non-equity natural gas plays will come under pressure the longer U.S. natural gas prices remain weak. That's not good news for this fund.