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Banking, finance, and taxes

Another PR Blow For E*TRADE (ETFC, ETSPX, ETRUX, ETTIX, ETINX)

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By Douglas A. McIntyre Updated Published
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If you look on the surface, it looks like E*TRADE Financial (NASDAQ: ETFC) is still trying to shrink its operations where it can.  This week, E*TRADE said it plans to cut its activities in its mutual fund operations.  The funds being targeted are the index funds, which include the E-Trade S&P 500 Index (ETSPX), the E-Trade Russell 2000 Index (ETRUX), the E-Trade Technology Index (ETTIX), and the E-Trade International Index (ETINX).

The funds are now no longer taking new assets and plan to close on or before March 27.

The E-Trade S&P 500 Index (ETSPX) fund has about $230 million in assets.  If you have followed the S&P it has not been a good year.  This was north of $11.00 a year ago and shares are now flirting with $6.00.

The problem is not just the performance of the funds.  It looks like these just haven’t gained any significant market penetration when you compare them to the billions of dollars invested in Fidelity, Vanguard, and Russell.

The company claims “…that this decision has nothing at all to do with the financial health of E-Trade Financial, which has been, and continues to be, very well capitalized by every applicable regulatory standard.”

Investors can still access roughly 7,000 funds via E-Trade.  This is just the end of the line for its own index funds mentioned and E-Trade has additional funds out there.

After all the economic woes that have hit E*TRADE it is still hard to know if this just a business decision or if it is the sign of yet another wave of problems.   With the common stock now under $1.00, the story pretty much speaks for itself.  E*TRADE was a $20.00 stock in mid-2007.

Jon C. Ogg
February 25, 2009

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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