Tag Archives: TMV

6 Direxion ETFs to See Reverse Splits

Direxion Shares announced it will execute reverse splits for six of its leveraged ETFs.

Five of the funds will experience a a 1-for-5 reverse split:
Direxion Daily Real Estate Bear 3x Shares (DRV)
Direxion Daily Emerging Markets Bull 3x Shares (EDC)
Direxion Daily Financial Bull 3x Shares (FAS)
Direxion Daily Latin America Bull 3x Shares (LBJ)
Direxion Daily 20+ Year Treasury Bear 3x Shares (TMV)

The Direxion Daily Russia Bull 3x Shares (RUSL) will experience a 1-for-3 reverse split

The splits will go into effect for shareholders of record after the close of the markets on Wednesday, November 9, 2011. The shares of each ETF will be offered on a split-adjusted basis on November 10. As is the case with regular stock splits, the total market value of the shares outstanding will not be affected, except with respect to the redemption of fractional shares.

Unlike mutual funds, fractional shares of ETFs can’t be bought or sold. Thus, shareholders may redeem the fractional shares for cash at each ETF’s split-adjusted net asset value (NAV) as of November 9. These redemptions could cause a shareholder to realize a gain or loss. Otherwise, the reverse split will not result in a taxable transaction for holders of ETF shares. No transaction fee will be imposed on shareholders for such redemption.

The reverse split will result in each ETF having outstanding one aggregation of less than 50,000 shares to make a creation unit, or an “odd lot unit.” Direxion says each ETF will provide one authorized participant with a one-time opportunity to redeem the respective odd lot unit at its split-adjusted NAV, or at the NAV on such date the authorized participant seeks to redeem the odd lot unit.

ProShares Launches Mild Short Bond Fund

With interest rates near 0%, the only direction they can go is up. And as anyone who has ever read a story about bonds knows, when interest rates go up, bond prices fall. When that will happen is anyone’s guess. But ProShares is getting ready for that day. ProShares timed the market perfectly last time by launching a series of ETFs to short the equities markets just in time to capitalize on the crash that started in October 2007. Now, they are priming the market for the popping of the bond bubble.

The ProShares Short 20+ Year Treasury ETF (TBF), a fund designed to provide short exposure to long-term U.S. Treasury bonds, launched Thursday on the NYSE Arca. This ETF will try to match the inverse performance of the Barclays Capital 20+ Year U.S. Treasury Index each day. The Barclays Capital 20+ Year U.S. Treasury Index trackes the performance of U.S. Treasury bonds with maturities of 20 years or greater.

ProShares says it’s launching this in “direct response to strong investor demand for a single beta2 short treasury fund.” I believe them. The inverse bond ETFs will soon become very hot.

Currently, ProShares offers two bond funds that offer a 200% inverse move of two other indexes. The ProShares UltraShort 7-10 Year Treasury ETF (PST) gives double the inverse return of the Barclays Capital 7-10 Year U.S. Treasury Index, while the ProShares UltraShort 20+ Year Treasury ETF (TBT) does the same for the Barclays Capital 20+ Year U.S. Treasury Index. All three charge an expense ratio of 0.95%

Of course, if negative 200% is a little too tame for you, Direxion offers short Treasury funds that seek an inverse 300% return to their tracking indexes. The Daily 10-Year Treasury Bear 3x Shares (TYO) and the Daily 30-Year Treasury Bear 3x Shares (TMV) also charge a fee of 0.95%.

The new ProShares bond ETF stands out from this crowd in that it’s the only one to offer a 1-to-1 inverse ratio, just a mild negative 100% of its tracking index.

TheStreet.com says the recent uproar over leveraged ETFs has led UBS and Ameriprise to stop selling the funds.