Posts for Ticker ‘UYG’

More Official Warnings on Leveraged ETFs (FAS, FAZ, UYG, SKF, SDS, SSO)

money-stack-imageThe Financial Industry Regulatory Authority and the Securities and Exchange Commission decided to issue an Investor Alert yesterday called “Leveraged and Inverse ETFs: Specialized Products with Extra Risks for Buy-and-Hold Investors”….  This warning was meant to warn retail investors of the added risks in leveraged ETF investments that exist above and beyond the traditional world of investment products. This follows a recent FINRA regulatory notice reminding securities firms and brokers of their sales practice obligations relating to leveraged and inverse exchange-traded funds.

While this is not against any single leveraged ETF (or inverse ETF), it may have at least some influence on leveraged ETF and reverse-leveraged ETFs.  The two key ETFs for leverage and high volume and high volatility are the Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) as they are the triple-leverage financial sector ETFs.

A handful of the other active leveraged and inverse-leverage ETFSs are as follows: Ultra Financials ProShares (NYSE: UYG) seeks twice the daily performance of the Dow Jones U.S. Financials index.  UltraShort Financials ProShares (NYSE: SKF) seeks twice the inverse of the daily performance of the Dow Jones U.S. Financials index. UltraShort S&P500 ProShares (NYSE: SDS) seeks twice the inverse of the daily performance of the S&P 500 Index. Ultra S&P500 ProShares (NYSE: SSO) twice the daily performance of the S&P 500 Index.
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Posted on: August 19, 2009 – 9:49 am in ETF, Index, Regulation, SEC, Trading Alert, , , , , ,

Brokerage Giant Restricts Leveraged and Inverse ETF Products (FAS, FAZ, UYG, SKF, SDS, SSO)

The movement against, or at least a move to better quantify, leveraged ETFs is still going.  In fact, it is becoming more clear.  While this is not against any single leveraged ETF (or inverse ETF), this does have at least have a continued influence on leveraged ETF and reverse-leveraged ETFs such as the Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ).  Those are triple-leverage financial sector ETFs. A handful of the other active leveraged and inverse-leverage ETFSs are as follows: Ultra Financials ProShares (NYSE: UYG) seeks twice the daily performance of the Dow Jones U.S. Financials index.  UltraShort Financials ProShares (NYSE: SKF) seeks twice the inverse of the daily performance of the Dow Jones U.S. Financials index. UltraShort S&P500 ProShares (NYSE: SDS) seeks twice the inverse of the daily performance of the S&P 500 index. Ultra S&P500 ProShares (NYSE: SSO) twice the daily performance of the S&P 500 index.

This morning came an announcement from Morgan Stanley Smith Barney that it has placed certain restrictions on the sale of leveraged, inverse, and leveraged inverse exchange traded funds.  The reason even started out as “In response to concerns raised by regulators about these securities…”
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Posted on: August 7, 2009 – 1:32 pm in Brokerage Firms, ETF, Regulation, , , , , ,

Mass. Inquiry on Leveraged ETF’s (FAS, FAZ, UYG, SKF, SDS, SSO)

There may be some misconceptions out in the market over an inquiry into the leveraged ETF universe.  The Massachusetts Secretary of State has inquired into the sales, marketing, and disclosure practices of leveraged ETF’s.  This issue will bring more attentionon some top volume leveraged-ETFs.  The two most active before the reverse splits were the Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) in the triple-leverage.  Others are as follows:

Ultra Financials ProShares (NYSE: UYG) seeks twice the daily performance of the Dow Jones U.S. Financials index.  UltraShort Financials ProShares (NYSE: SKF) seeks twice the inverse of the daily performance of the Dow Jones U.S. Financials index. UltraShort S&P500 ProShares (NYSE: SDS) seeks twice the inverse of the daily performance of the S&P 500 index. Ultra S&P500 ProShares (NYSE: SSO) twice the daily performance of the S&P 500 index.

There are many other issues from leveraged ETF families out there.  These are just some of the top leveraged exchange traded funds by trading volume.  But there are some considerations here that are a part of the Mass. Secretary of State inquiry.
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Posted on: July 15, 2009 – 2:00 pm in ETF, Law, Regulation, , , , , ,

More Reverse Splits, or Just Closure, Possible or Needed in ETFs (FAS, FAZ, UYG, BAC, BHH, ARBA, IIH, AKAM, VRSN, UNG, USO, GLD, SDS, SPY, NYX, NDAQ)

Money Stack ImageWe have been large fans of exchange-traded funds, exchange-traded notes, and other exchange-traded instruments which are open for trade throughout the day that are allowed to be invested in just like a stock.  But with all new and growing markets, there are risks that need to be kept in check.  There are some leveraged ETF’s and their inverse counterparts which might need to see reverse share splits in the near future.  The notion of so many low-priced shares being so active may wreak havoc as the funds managing each ETF try to keep up with appropriate derivatives and in buying and selling shares of the components that are supposed to be the underlying securities.  There are even a few ETF’s which should probably just be closed down entirely and liquidated to holders.  Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and The Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) are both prime examples of ETFs which skew total daily exchange trading volume numbers because of low share prices today and massive trading volume.  This is not meant to pick on the fund groups because they created trading vehicles which they did not expect to see some of these moves.  There are many more ETFs and ETNs to consider here.

Direxion just announced a reverse split for another ETF yesterday, but not its two financial triple-leverage ETFs.  Direxion Daily Financial Bull 3X Shares (NYSE: FAS) is now back down close to $8.00 per share, yet it trades 250 million shares on an average day.  The Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) is barely above $5.00 and trades more than 200 million shares on an average day.  So between the FAS and FAZ, you have an average of more than 450 million shares, and at today’s prices that is close to $3 billion worth of nominal value.

This review discusses a portion of the ETFs and ETNs and the ones under discussion today, along with underlying key companies, are Ultra Financials ProShares (NYSE: UYG), Bank of America Corporation (NYSE: BAC), B2B Internet HOLDRs (AMEX: BHH), Ariba, Inc. (NASDAQ: ARBA), Internet Capital Group (NASDAQ: ICGE), Internet Infrastructure HOLDRs (AMEX: IIH), VeriSign Inc. (NASDAQ: VRSN), Akamai Technologies Inc. (NASDAQ: AKAM), United States Natural Gas (NYSE: UNG), United States Oil (NYSE: USO), SPDR Gold Shares (NYSE: GLD), UltraShort S&P500 ProShares (NYSE: SDS), SPDRs (NYSE: SPY), New York Stock Exchange (NYSE: NYX) and the NASDAQ OMX Group Inc. (NASDAQ: NDAQ).
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Posted on: June 23, 2009 – 12:42 pm in Banking, Commodities, ETF, Index, Oil & Gas, Trading Alert, , , , , , , , , , , , , , , ,

Leveraged ETF’s Weigh Bank Preferred Redemptions (FAS, FAZ, UYG, SKF, PGF, BAC, JPM, WFC, GS, C)

The triple-leverage financial ETFs of Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) are getting to deal with yet another potential wrench in the machine: preferred share redemptions from major banks.  This will also pose a potential issue for the Ultra Financials ProShares (NYSE: UYG) and the UltraShort Financials ProShares (NYSE: SKF) ETFs that trade at double-leverage of the Dow Jones U.S. Financials index.

The PowerShares Financial Preferred (NYSE: PGF) is the ETF that specifically tracks the preferred shares of financial stocks.  This can also be impacted, although we would note that this ETF here has five of its top ten holdings which are European bank preferred shares and the top ten holdings are over half of the ETF.

This comes on the hells of this morning’s Bank of America Corporation (NYSE: BAC) announcement that it was offering a tender exchange offer on nine of its preferred series for up to 200 million shares of common stock.  At today’s prices, that would represent more than $2.2 billion in new common stock.  The largest US bank holding company issuers we have seen with Bank of America are JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Co. (NYSE: WFC), and Goldman Sachs Group Inc. (NYSE: GS).

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Posted on: May 28, 2009 – 11:27 am in Banking, Bonds, Brokerage Firms, ETF, Financial Stocks, Trading Alert, , , , , , , , , ,