RTSA: Another Day, Another iPath Early Termination

Sep.16.12 | About: iPath Short (RTSA)

Thursday (9/13/12) was the last day of trading for two Barclays iPath ETNs, and just as they were about to wind down, the iPath Short Extended Russell 2000 TR Index ETN (NYSE:RTSA) hit its early termination trigger. RTSA will be delisted after the close of trading on September 19 and redeemed the following day for $14.8054 per note (press release).

Analysis/Opinion: RTSA is the last of the iPath -3x no-reset ETNs. When Barclays launched the Eleven New iPath ETNs With Indescribable Leverage, the lineup also included two international offerings with -2x no-reset leverage. They are not currently in danger of hitting their “ruin prevention” early redemption trigger. However, they are textbook definitions of Zombie ETFs (ETNs in this case) and investors should not touch them with a 10-foot pole:

iPath Short Enhanced MSCI Emerging Markets ETN (NYSEARCA:EMSA) is currently quoted with a bid ask spread of $46.63/$140.17 (200.6%) and has posted many months of zero volume.

iPath Short Enhanced MSCI EAFE ETN (NYSEARCA:MFSA) is currently quoted with a bid ask spread of $38.70/$116.84 (201.9%) and has traded a total of about 3,000 shares for all of 2012.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.