SAN DIEGO (ETFguide.com) - Barclays Bank is planning a 1-for-4
reverse share split of its iPath S&P 500 VIX Short Term Futures
ETN (NYSEArca: VXX). The reverse split is scheduled to occur on
November 9, 2010.
The reverse split means shareholders as of the November 8th record
date will receive 1 share of every 4 existing shares.
is a gauge that aims to reflect market expectations based upon the
movement of S&P 500 index options. During severe market
declines, investor fear usually lifts options prices along with the
VIX. When the market rises, investor fear subsides, which typically
causes the VIX to fall.
The VIX currently trades around 21.25, not far from its 52-week
low of 12.23.
Falling volatility and contango has put severe downward pressure
on VXX's share price. In this instance, contango happens when
future VIX contracts are more expensive than spot prices. As a
result, the notes' performance suffers as it replaces expiring
contracts with higher priced contracts.
will retain the same ticker symbol but a new CUSIP number will be
VXX offers exposure to a daily rolling long position in the
first and second month VIX futures contracts and aims to reflect
the implied volatility of the S&P 500 Index at various points
along the volatility forward curve. The index futures roll
continuously throughout each month from the first month VIX futures
contract into the second month VIX futures contract.
Barclays also manages the iPath S&P 500 VIX Mid-Term Futures
ETNs are debt instruments that pay a return linked to the
performance of a single security, currency or index. Unlike
traditional ETF products they carry credit risk of the issuing
New Metals ETF
In other ETF news, Van Eck Global introduced the Market Vectors
Rare Earth/Strategic Metals ETF (NYSEArca: REMX) today. The New
York, NY-based investment firm describes REMX as a 'pure play' on
miners, refiners, recyclers and producers.
REMX is a
meaning it takes positions in both U.S. and non-U.S. publicly
traded companies. The fund's underlying index contains 24 stocks
and uses a modified market capitalization weighting strategy.
Stocks from Australia (23.90%), Canada (19.81%) and the U.S.
(18.77%) are the largest countries represented. The fund's annual
net expense ratio is 0.57%.