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Spa ETF announces closing of MarketGrader ETFs in Europe and US

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UK-based exchange-traded fund provider Spa ETF has announced the closing of the Spa MarketGrader ETFs in the US and Europe.

UK-based exchange-traded fund provider Spa ETF has announced the closing of the Spa MarketGrader ETFs in the US and Europe.

The last day of trading of the US funds on NYSE Arca took place on 25 March, after which they closed to new investment.

According to the firm, the decision was made by the board of trustees of the US funds in consultation with Spa ETFs, the investment advisor to the funds, on the grounds that current market conditions were unsuitable for a long-only equity investment strategy, such as the one employed by the MarketGrader ETFs and that closing the funds was in the best interest of the funds’ shareholders.

The six US-listed sub-funds of the Spa ETF Trust are the Market Grader 40, Market Grader 100, Market Grader 200, Market Grader Large Cap, Market Grader Mid Cap and Market Grader Small Cap ETFs. The US funds are currently in the process of closing down and liquidating their portfolios.

The Spa MarketGrader ETFs attempted to distinguish itself by applying a quantitative security selection process to the investment universe, using 24 different quantitative filters within four main areas: growth, value, profitability and cash flow. All components are weighted equally.

The US fund range had been repeatedly targeted by industry commentators as a likely candidate for closure because of the low levels of assets in the various sub-funds. Trading in the funds’ shares was also described as ‘close to non-existent’.

However, the firm says that the Spa ETF Trust will remain open and that the investment advisor hopes to list new ETFs later this year. The UK-based business is also delisting its funds from exchanges in Italy and the UK.

“In light of the current market environment keeping the Spa MarketGrader Funds open would compromise investors and increase costs,” says managing director Daniel Freedman (pictured). ‘However, the Spa ETF Trust remains open and we plan to partner with other institutions to bring new ETFs to market in Europe and the US in 2009. Additionally, when market conditions improve we may reintroduce the MarketGrader strategy.’

The Spa ETF board says the company intends to undertake a total redemption of all shares in the European-listed MarketGrader funds in issue on 1 May through compulsory redemption at their then net asset value per share. As a consequence of the decision to terminate trading, the board has charged to the sub-funds all unamortised establishment expenses and all other costs associated with the termination.

Following the delisting of the shares from Borsa Italiana’s ETF Plus Market as of 30 March, Spa ETF plans to apply to the UK Listing Authority for the cancellation of the listing of the shares of the sub-funds with effect from 1 May, and to the London Stock Exchange for the cancellation of the right to trade in the funds’ shares with effect from that date.

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