MacroShares announced a 3-for-1 share split for two exchange traded funds (ETFs) that track the price of crude oil. The split should make the ETFs more accessible to investors as well as boost liquidity. MacroShares Oil Up Tradeable Trust (UCR) and MacroShares Oil Down Tradeable Trust (DCR) typically trade fewer than 10,000 shares per day. MacroShares said the ETFs will give shareholders two additional shares for every outstanding share they own on Oct. 19. The payable date for the additional shares will be Oct. 22, reports Lawrence Carrel for TheStreet.com.
These were formerly Claymore products, but Claymore ended its partnership with MacroShares Sept. 30. The idea behind the ETFs is that UCR tracks the price of crude oil and DCR does the inverse. The price of one is correlated to the expense of the other and there is a transfer of assets back and forth to maintain a certain balance. However, there have been some issues with these ETFs and their divergence from their net asset value (NAV) and their share price. This is unusual because ETFs are designed not to stray from their NAV.
The company realizes that the price of oil has increased, making the share price more expensive. By breaking up the ETFs, it will make it less expensive to make a market in the two products. According to one expert, MacroShares’ split seems to be an attempt to lower the price of the ETFs so that more people will want to buy and trade them.
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