XShares raises $10M for exchange traded funds despite struggle

XShares, a New York company that is creating "exchange traded funds" has raised $10 million investment from a number of European institutional investors, despite evidence the funds may be struggling.

The company said the money will be used to drive sales and marketing efforts and to further product development. The company's valuation is "substantially in excess of $100 million," the company told Dow Jones (subscription only), which reported the news.

In February, XShares raised $10 million from Grail Partners and others. The WSJ reported earlier this month on the large spreads on ETFs between bidding and asking prices. Large spreads discourage investors because it can eat into an investment.

it referenced the small $3 million HealthShares Infectious Disease ETF, run by XShares. That ETF had a large 1.6 percent average spread from May to July.