Direxion Sets Reverse Splits On 4 ETFs

June 18, 2010

Direxion, the Newton, Mass.-based company known for its triple-exposure bull-and-bear ETFs, plans 1-for-5 reverse share splits on four of its leveraged bear ETFs whose indexes have moved higher and made the funds’ net asset values too low to be easily traded.

The splits are effective July 8, for shareholders of record as of the
U.S.
market close on July 7.

The ETFs are:

  • The Direxion Daily Energy Bear 3X Shares (NYSEArca: ERY)
  • The Direxion Daily Real Estate Bear 3X Shares (NYSEArca: DRV)
  • The Direxion Daily Small Cap Bear 3X Shares (NYSEArca: TZA)
  • The Direxion Daily Technology Bear 3X Shares (NYSEArca: TYP)

 

“It’s become harder and potentially more cumbersome to trade with such low NAVs of the funds,” Direxion Director of Marketing Andy O’Rourke said in a telephone interview. O’Rourke noted that all the funds are now worth less than $10, and that investors and market makers have generally come to expect ETF share prices in a broad range between $10 and $50 a share.

The reverse splits will cut the number of outstanding shares to a fifth of the current numbers, while at the same time increase their share prices by a factor of five.

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