Barclays (NYSE:BCS), the parent company of ETN sponsor iPath, announced the popular iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX) will undergo a 1-for-4 reverse split. The record date for the split will be October 4 and the iPath S&P 500 VIX Short-Term Futures ETN will begin trading at its split-adjusted price on October 5.
VXX debuted in February 2009 and has proven popular with traders and investors, raking in nearly $1.6 billion in assets under management. However, the ETN has been a disaster in terms of generating positive returns.
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Designed to profit from elevated fear in the broader market, VXX has been decimated by the rebound in U.S. equities since the March 2009 market bottom. VXX tracks first and second month VIX futures contracts, which leads to an expense ratio of 0.89 percent, a number that is considered high in the world of exchange-traded products. VXX has lost almost 98 percent of its value since its February 2009 debut.
The ETN previously engineered a 1-for-4 reverse split in 2010. Reverse splits are not uncommon with leveraged or "geared" ETFs and ETNs. Last week, ProShares, the largest issuer of inverse and leveraged ETFs, announced upcoming reverse splits for nine of its ETFs.
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