Barclays plans to reverse split shares of a volatility-linked exchange traded note that has plunged in value this year along with the CBOE Volatility Index while stocks rise to the highest levels since 2007.
The iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) will implement a 1-for-4 reverse split on Oct. 5.
Barclays, the ETN’s issuer, said it has the right to initiate a reverse split if the indicative value of VXX falls below $25 a share. On Friday, the closing indicative value of the ETN was $8.71.
The reverse split will not change the overall value of shareholders’ investment – they will be left with fewer shares with each one at a higher share price.
VXX is down 75.5% year to date and has fallen 50.9% over the past three months, according to investment researcher Morningstar.
The ETN has gathered inflows of more than $900 million in the third quarter despite its price decline as investors look for ways to hedge a potential pullback in stocks. [VIX ETF Sees Nearly $1B Quarterly Inflow]
VXX and other volatility-linked products are designed to track futures contracts based on the CBOE Volatility Index, or VIX.
Earlier this month, ProShares Ultra VIX Short-Term Futures ETF (NYSEArca: UVXY) conducted a 1-for-10 reverse split. [UVXY Reverse Split]
iPath S&P 500 VIX Short Term Futures ETN