Macroshares To Split Its Bullish and Bearish Oil Funds Three-For-One

The Macroshares are about to get cheaper—kind of. Macro Markets LLC has announced a three-for-one split for its Macroshares Oil Up Tradeable Shares (UCR) and Macroshares Oil Down Tradeable Shares (DCR).

At UCR's current price of $73.50, that would work out to a new share price of $24.50. DCR, currently $46.40, would be about $15.50. UCR is up roughly 18% year to date, and DCR is down about 20%.

Macro Markets says the split will make the shares more accessible to investors and it anticipates that the move will increase the shares' liquidity. The decision definitely makes sense for UCR, but DCR has already experienced a significant price decline. Of course, the two funds are issued as pairs—one goes up when the other goes down—so Macro Markets couldn't pick and choose on the splits.

Shareholders of record as of the close of business on October 19 will receive two additional shares on October 22 for each UCR or DCR share they own. Trading in the new shares commences October 23.

The main question to consider is whether the split will help the shares or not. The products were launched late last year and are hardly thriving. UCR has about $28 million in assets, while DCR has just about $14 million. The products were troubled in the early days of trading by limited liquidity and some general misunderstanding of what price they actually reflect: Some people thought they would reflect the price of spot crude, and others thought they would track a rolling futures position; in reality, they represent something closer to a long-term futures contract on oil.

By splitting the shares, Macro Markets hopes to boost volume and make the shares seem more liquid to market participants. Ultimately, however, growth in volume will have to be organic ... not manufactured by splits ... and whether and when Macro Markets can pull that off with the oil products remains to be seen.

So far, the most popular oil ETF in the United States is the U.S. Oil Fund (USO), which was the first product to market and now has more than $420 million in assets.

Written by Heather Bell