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ETF Pulse: Shorting Volatility and Reverse Splits
October 7, 2011
It’s been a busy week in the U.S. ETF marketplace, here’s a quick snapshot of recent activity.
Just this week the ProShares Short VIX Short-Term Futures ETF (NYSEArca: SVXY) was launched. SVXY is a VIX ETF designed for bears because it aims for daily inverse or opposite performance (-1x) to the S&P 500 VIX Short-Term Futures Index. It charges annual expenses of 0.95%.
For VIX bulls, ProShares also offers a 2x daily leveraged fund called the ProShares S&P 500 Ultra VIX Short-Term futures (NYSEArca: UVXY) along with 1x exposure to Mid-Term VIX futures (NYSEArca: VIXM) and Short-Term VIX futures (NYSEArca: VIXY).
New Small Cap ETFs from Russell
Russell Investments launched four Small Cap ETFs on NASDAQ. Each fund is designed to provide investors with access to specific investment strategies that mirror the way equity managers tend to invest.
"We created these unique products to answer a very specific need in the market," said James Polisson, CEO of Russell's global ETF business. "Sophisticated investors now have an investment vehicle that provides them with focused exposure in the small cap asset class beyond the strict classification by sector and style."
The four ETFs listed today are based on corresponding and newly launched Russell U.S. Small Cap Investment Discipline Indexes. The new suite of small cap ETF consists of the following:
--Russell Small Cap Aggressive Growth ETF (NasdaqGM: SGGG)
--Russell Small Cap Consistent Growth ETF (NasdaqGM: SCOG)
--Russell Small Cap Low P/E ETF (NasdaqGM: SCLP)
--Russell Small Cap Contrarian ETF (NasdaqGM: SCTR)
The annual expense ratio is 0.45% for these particular Russell ETFs and the company now offers a total of 21 ETFs in the United States along with two in Australia.
Reverse Share Splits on 6 Direxion ETFs
Boston, MA-based Direxion is planning reverse splits for six of its leveraged ETFs. The firm will execute a 1-for-5 reverse split of the shares of the Direxion Daily Real Estate Bear 3x Shares (NYSEArca: DRV), Direxion Daily Emerging Markets Bull 3x Shares (NYSEArca: EDC), Direxion Daily Financial Bull 3x Shares (NYSEArca: FAS), Direxion Daily Latin America Bull 3x Shares (NYSEArca: LBJ), and Direxion Daily 20+ Year Treasury Bear 3x Shares (NYSEArca: TMV) for shareholders of record after the close of the markets on Wednesday, November 9th, 2011.
Additionally, the firm will execute a 1-for-3 reverse split of the shares of the Direxion Daily Russia Bull 3x Shares (NYSEArca: RUSL) for shareholders of record after the close of the markets on Wednesday, November 9th, 2011.
The total market value of the shares outstanding will not be affected as a result of this reverse split, except with respect to the redemption of fractional shares.
Shareholders of record of the above ETFs on November 9th, 2011 will participate in the reverse splits and shares of each ETF will be offered on a split-adjusted basis on November 10th, 2011.
Here’s hypothetical examples of how reverse share splits work:
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1-for-5 Reverse Split
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# of Shares Owned
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Hypothetical Mkt Price
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Total Share Value
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Pre-Split
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100
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$10
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$1,000
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Post-Split
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20
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$50
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$1,000
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1-for-3 Reverse Split
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Pre-Split
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90
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$10
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$900
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Post-Split
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30
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$30
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$900
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