Zombie ETF
Definition:
A “zombie ETF” refers to an Exchange-Traded Fund experiencing low liquidity, minimal investor interest, and often possessing assets under management insufficient to sustain its operations. This condition can potentially lead to the fund’s closure or delisting.
Characteristics:
Low Trading Volumes: Zombie ETFs typically have limited daily trading activities.
Reduced Assets: They may have low assets under management, making them financially unsustainable.
Risks and Considerations
Investor Awareness: Understanding the concept helps investors identify and manage risks associated with low-performing ETFs.
Market Dynamics: Zombie ETFs serve as indicators of market sentiment and fund performance.
Conclusion
Zombie ETFs represent struggling Exchange-Traded Funds with low trading volumes and reduced investor interest, potentially facing the risk of closure or delisting. Understanding their characteristics and risks helps investors make informed decisions regarding their investment portfolios.