ProShares, the Bethesda, Md.-based fund provider known for its extensive roster of leveraged and inverse funds, said it will serve up seven straight splits and eight reverse splits, including a 1-for-10 reverse split on the ProShares Ultra VIX Short-Term Futures ETF (NYSEArca: UVXY) in September, the second such split on UVXY in less than a year.
The reverse split will shrink the number of UVXY shares on the market while pumping up the share price 10 times. UVXY shares have fallen about 80 percent this year—a function of declining volatility and the negative roll yield on futures contracts the fund invests in that are linked to the CBOE Volatility Index, or VIX, the market’s leading measure of volatility.
UVXY settled at $5.80 a share on Tuesday, down 5 percent on the day. That means that at today’s price, UVXY would be trading at $58 a share after the reverse split—a price at which bid/ask spreads would amount to a lot less for a given dollar value of an investment than if the shares remained at their current value.
Conversely, a regular split cuts the share price by expanding the number of outstanding shares, and is reserved for securities whose prices have increased enough to make the share value discouraging to potential investors.
None of the splits or reverse split will change the value of a shareholder’s investment, the company said in a statement.
It and the 14 other splits will be available to shareholders of record as of June 5 and payable after the market close on June 7. Each ETF will trade at its post-split price on June 10.
UVXY is the only ETF on the market to offer leveraged exposure to VIX futures by delivering twice the daily return of its underlying S&P index. The fund is a hedging tool against equities risk, but it may also help investors gain on volatility spikes one month into the future, according to the company.
Splits can lead to fractional shares for investors who are not holding an exact multiple of the reverse split. Such fractional shares will be redeemed for cash, which can mean an investor might realize gains or losses and be taxed on those, the company said.
UVXY has gathered just over $377 million since it came to market in October 2011. The ticker, symbol and underlying index will not change.
The eight reverse splits, including UVXY’s, are as follows:
- ProShares Ultra VIX Short-Term Futures ETF (NYSEArca: UVXY), 1-for-10 reverse split
- ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY), 1-for-5 reverse split
- ProShares UltraShort DJ-UBS Natural Gas ETF (NYSEArca: KOLD), 1-for-4 reverse split
- ProShares UltraShort Oil & Gas ETF (NYSEArca: DUG), 1-for-4 reverse split
- ProShares UltraPro Short Financials ETF (NYSEArca: FINZ), 1-for-4 reverse split
- ProShares UltraPro Short 20+ Year Treasury ETF (NYSEArca: TTT), 1-for-4 reverse split
- ProShares UltraShort Russell1000 Value ETF (NYSEArca: SJF), 1-for-4 reverse split
- ProShares UltraShort MSCI EAFE ETF (NYSEArca: EFU), 1-for-4 reverse split
The seven straight splits, all of them 2-for-1 splits, ProShares is setting are as follows:
- ProShares Ultra Consumer Goods ETF (NYSEArca: UGE)
- ProShares UltraPro S&P500 ETF (NYSEArca: UPRO)
- ProShares UltraPro MidCap400 ETF (NYSEArca: UMDD)
- ProShares Ultra Russell3000 ETF (NYSEArca: UWC)
- ProShares Ultra Health Care ETF (NYSEArca: RXL)
- ProShares Ultra Consumer Services ETF (NYSEArca: UCC)
- ProShares UltraPro Russell2000 ETF (NYSEArca: URTY)
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.