ProShares, the Bethesda, Md.-based fund provider known for its
extensive roster of leveraged and inverse funds, said it will serve
up a 1-for-10 reverse split on the ProShares Ultra VIX Short-Term
Futures ETF (NYSEArca:UVXY) in September.
The reverse split will shrink the number of UVXY shares on the
market while pumping up the share price 10 times. However, the
reverse split won't change the value of a shareholder's investment,
the company said in a statement.
The ETF was trading at $5.70 a share midday Thursday, up 4.2
percent on the day. That means that at today's price, UVXY would be
trading at $57 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
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.
The split 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
Outstanding shares of the fund will be exchanged for new shares
on Sept. 6, with post-split shares first trading on Sept. 7.
UVXY has gathered just over $305 million since it came to market
in October 2011. Ticker, symbol and underlying index will not
change, but UVXY will get a new CUSIP.
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