ETF Trends
ETF Trends

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

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.