Barclays Plc will redeem its Barclays Short C Leveraged Inverse S&P 500 TR ETN (NYSEArca: BXDC) this week after the security’s price today moved down to a $10 threshold that triggers an automatic redemption mechanism, making the security the latest casualty of an equity market that is in a bullish mode.
Barclays, the bank that backs BXDC and the entire family of iPath ETNs, will redeem BXDC on Friday, Jan. 11. Holders of the note as of Friday, Jan. 4 will receive a cash payment of $10 a share, Barclays said today in a press release. The ETN has $3.1 million in assets, according to data compiled by IndexUniverse.
The redemption looks a lot like what happened to the iPath Short Extended Russell 2000 TR Index ETN (NYSEArca: RTSA) in September of last year, though RTSA’s redemption was triggered at a $15-per-share threshold. RTSA, like BXDC, is a short security that fell prey to the rise in equity markets.
The S&P 500 Index rose more than 13 percent in 2012, helped by the Federal Reserve’s ongoing easy-money policies and a general stabilization and improvement in the macroeconomy. That, of course, spelled trouble for BXDC, a security designed to rise when the market falls. The ETN has thus lost more than three-quarters of its value in the past year.
BXDC last traded at $10 per share, down 68 cents, or 6.37 percent, according to data posted on Google Finance.
Trade in the shares was halted on Friday afternoon for news pending, and was resumed on Monday morning, according to the New York Stock Exchange.
This week, the NYSE expects to hear from the SEC. What will it mean for ETF investors?
Our annual fixed-income conference is coming up in a little more than a week and I can’t wait.
When it comes to reinvesting dividends, mutual funds have ETFs beat.
With VIX spiking, it’s tempting to pile in or bet against it. Both are a bad idea.