Are Investors Better Off Doing Nothing During Exchange-Traded Fund Closures?


We investigate a sample of several Exchange-Traded Funds (ETFs) that closed between 2012 and 2019. Our findings show that ETFs close after positive returns and flows. Moreover, both returns and flows are good predictors of the ETFs’ decision to close. In general, we also find that small ETFs earn greater daily returns on average than larger ETFs with the same investment objective. We finally highlight that after the closure announcement, in normal circumstances (e.g., without exposure to extra fees), investors are better off keeping calm and doing nothing while waiting to receive shares’ cash at the NAV from the ETF issuer.

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*This paper received the CFA Asia Pacific Research Exchange Award.


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