ProShares to Reverse Split VIX ETF

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ProShares is planning to execute a reverse 1-for-6 share split on the ProShares Ultra VIX Short-Term Futures ETF (NYSEArca: UVXY) in March.

As a result of falling volatility in the S&P 500 (NYSEArca: SPY), UVXY's share price has cratered from $40 to around $5.13. The CBOE Volatility Index ^VIX is trading close to 17 which is just a few points away from its 52-week low of 14.27.

UVXY attempts to deliver twice (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index and the reverse split will not change the value of a shareholder's investment. 

The underlying index keeps an average weighted settlement date of one month in the future by rolling a portion of the position in the first month VIX futures contracts into the second month VIX futures contract on a daily basis. Since its 2009 inception date, the index has maintained a negative correlation of -0.76 to the S&P 500.

Fund

Ticker

Split Ratio

Old CUSIP

New CUSIP

ProShares Ultra VIX Short-Term Futures ETF

UVXY

1:6

74347W635

74347W544

The reverse split will increase the price per share of the fund with a proportionate decrease in the number of shares outstanding. For a 1-for-6 reverse split, every six pre-split shares held by a shareholder will result in the receipt of one post-split share, which will be priced six times higher than the net asset value ( NAV ) of a pre-split share.

Fractional Shares from Reverse Splits
For shareholders who hold quantities of shares that are not an exact multiple of the reverse split ratio (for example, not a multiple of 6 for a 1-to-6 reverse split), the reverse split will result in the creation of a fractional share. Post-reverse split fractional shares will be redeemed for cash and sent to your broker of record. This redemption may cause some shareholders to realize gains or losses, which could be a taxable event for those shareholders.

UVXY was launched on October 3, 2011 and charges annual expenses of 0.95%.

ProShares manages 131 U.S. listed ETFs with approximately $23 billion in assets.

The following table shows the effect of a hypothetical 1-for-6 reverse split.

Period

# of Shares Owned

Hypothetical NAV

Value of Shares

Pre-Split

600

$10.00

$6,000.00

Pos-Split

100

$60.00

$6,000.00



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs

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