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August 7, 2015, 5:29 P.M. ET
Direxion Announces ETF Splits: 3X Bullish Gold Miners to See 1-for-10 Reverse
By Chris Dieterich
Leveraged exchange-traded fund company Direxion Investments announced reverse splits in six of its geared ETFs on Friday, including a popular play in gold miner stocks.
The Direxion Daily Gold Miners Index Bull 3X Shares (NUGT) will undergo a 1-for-10 reverse split that takes effect at the opening bell on Sept. 10. Holders get one share of the ETF for every 10 they own.
That’s no surprise. Falling gold prices have pushed down this ETF a whopping 72% this year: it trades at just $3.15 a share, down from around $11 at the start of the year.
Splits and reverse splits are forms of housekeeping by ETF providers. The splits will not change the value of a shareholder’s investment, but traders don’t want a fund that’s too pricey, or too cheap.
While spits are generally a wash economically, fractional shares that can lead to unplanned gains (or losses) and, thus, unplanned tax events. This blogger noted the phenomenon in theBarron’s print segment a while back.