ProShares suspends new creations in handful of ETFs


"There ETFs could skew HARD (usually higher) away from NAV," warns Stifel's Dave Lutz. ProShares this morning has suspended the ability to buy new units in the following ETFs: UCD, CMD, BOIL, KOLD, GDAY, CROC, ULE, EUFX, YCL, SVXY, and VIXM, "pending the effectiveness of a post-effective amendment to the funds’ registration statement."

Brendan Conway notes any moves higher - should they occur - would likely be temporary, noting something similar happened in a VelocityShares product two years ago.

Comments (4)
  • mmchilcote
    , contributor
    Comments (18) | Send Message
     
    could there be a good SVXY, XIV arbitrage trade? Short SVXY, long XIV?
    2 May 2014, 11:07 AM Reply Like
  • rick mule
    , contributor
    Comments (46) | Send Message
     
    Ok just what does this mean for current owners?
    2 May 2014, 11:45 AM Reply Like
  • rick mule
    , contributor
    Comments (46) | Send Message
     
    Ok just what does this mean for current holders?
    2 May 2014, 11:46 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (2146) | Send Message
     
    To my understanding you can still buy and sell, but the value is defined by the market, and not anymore actively tied to the underlying index (say inverse VIX in the case of SVXY).

     

    In other words, the issuing fund is at the moment not trying to correct the value of the ETF. The market makers that trade these ETFs also do not have all the tools available to correct the values ATM. As a result the value of the ETF is solely defined by trading. Once the fund has gotten some official paperwork approved, the ETF value will be corrected again to correspond the underlying index value, i.e. NAV.

     

    In short the value of the ETF is pretty much random ATM, not tied to anything material, and anyone holding the asset should expect even more volatility than usual...
    2 May 2014, 12:51 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs