Direxion, the second-largest issuer of inverse and leveraged exchange traded funds, is planning to shutter two of its leveraged currency hedged offerings.
The Direxion Daily MSCI Europe Currency Hedged Bull 2x Shares (NYSEArca: HEGE) and the Direxion Daily MSCI Japan Currency Hedged Bull 2x Shares (NYSEArca: HEGJ) will liquidate on May 27.
“Shareholders may sell their holdings in each Fund prior to the Closing Date and customary brokerage charges may apply to these transactions,” according to a Direxion filing with the Securities and Exchange Commission.
However, from May 23, 2016 through May 27, 2016 (the “Liquidation Date”), shareholders may be able to sell their shares only to certain broker-dealers and there is no assurance that there will be a market for each Fund’s shares during this time period, according to the filing.
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“Between the Closing Date and the Liquidation Date, each Fund will be in the process of closing down and liquidating its portfolio,” the filing said. “This process will result in each Fund increasing its cash holdings and, as a consequence, not tracking its underlying index, which may not be consistent with each Fund’s investment objective and strategy.”
HEGJ sought to deliver double the daily returns of the MSCI Japan US Dollar Hedged Index, making the new Direxion offering the double-leveraged currency hedged equivalent of the iShares MSCI Japan ETF (NYSEArca: EWJ). EWJ is the largest U.S.-listed Japan ETF.
HEGE’s objective was to deliver twice the daily returns of the MSCI Europe US Dollar Hedged Index, making the new Direxion ETF a leveraged answer to the wildly popular Deutsche X-Trackers MSCI Europe Hedged Equity ETF (NYSEArca: DBEU).
In March, Direxion shuttered the Direxion Value Line Small- and Mid-Cap High Dividend ETF (NYSEArca: VLSM), Direxion Value LineMid- and Large-Cap High Dividend ETF (NYSEArca: VLML) and the Direxion Value Line Conservative Equity ETF (NYSEArca: VLLV).
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