BlackRock’s Canadian subsidiary on Monday said it is closing the Claymore Inverse 10 Year Government Bond ETF and will distribute to shareholders the proceeds from the liquidation of assets.
Separately, BlackRock Investments Canada said Som Seif, former president and CEO of Claymore Investments, will be leaving the company to “pursue other opportunities.” Earlier this year, BlackRock reached a deal with Guggenheim to acquire the firm’s interest in Claymore Investments.
The decision to close the inverse bond ETF comes in the wake of the recent meltdown of VelocityShares Daily 2x VIX Short-Term ETN (NYSEArca: TVIX), a leveraged exchange traded note. Regulators are investigating the matter, which has raised questions over ETNs, and leveraged and inverse products. [SEC Reviewing TVIX Flop]
“We believe in providing products that will help investors build robust portfolios and achieve their savings and investment goals,” said Mary Anne Wiley, Head of iShares, BlackRock Canada. “Given the fund’s mandate is speculative in nature and designed for short-term use, we don’t believe it fits well with the iShares brand or product philosophy and will be terminating the fund.”
BlackRock Investments Canada expects Claymore Inverse 10 Year Government Bond ETF, which trades under the ticker CIB, will be terminated on or about June 22.
“BlackRock, and its leading exchange traded fund provider iShares, proposed late last year a series of regulatory reforms and recommendations for enhanced disclosure and transparency related to the ETF markets,” the company said in a press release Monday. [BlackRock Calls for More ETF Transparency]
“ETFs have provided investors with a low cost and transparent way to access a wide variety of asset classes for more than two decades. When first introduced, ETFs brought investors new levels of transparency and disclosure among other benefits,” it added. “However, increasingly complex ETFs and related products have sometimes failed to maintain that standard and have introduced new risks to these products.”
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