Amid AUM Exodus, ProShares Slashes VIX ETF Leverage

    ProShares saw a stunning, record-smashing $ 850 million crash in assets-under-management flood out of their VIX ETF complex in February… and so they needed to do something!!

    Almost 50% of their AUM just evaporated…

    And so ProShares has decided to slash the leverage of their two levered VIX ETF funds – SVXY (from 2x to 1.5x) and UVXY (from -1x to -0.5x)…

    ProShare Capital Management today announced that the investment objective of two of its ETFs will change effective as of close of business on February 27, 2018.

    ProShares Ultra VIX Short-Term Futures ETF (NYSE Arca: UVXY) will change its investment objective to seek results (before fees and expenses) that correspond to one and one-half times (1.5x) the performance of the S&P 500 VIX Short-Term Futures Index (“Index”) for a single day.

    The Fund’s investment objective currently is to seek results (before fees and expenses) that correspond to two times (2x) the performance of the Index for a single day. If the Fund were successful in meeting its new objective, on a day the Index rose 1%, the Fund should rise approximately 1.5%, before fees and expenses. Similarly, on a day the Index fell 1%, the Fund should fall approximately 1.5%, before fees and expenses.

    ProShares Short VIX Short-Term Futures ETF (NYSE Arca: SVXY) will change its investment objective to seek results (before fees and expenses) that correspond to one-half the inverse (-0.5x) of the Index for a single day.

    The Fund’s investment objective currently is to seek results (before fees and expenses) that correspond to the inverse (-1x) of the Index for a single day. If the Fund were successful in meeting its new objective, on a day the Index fell 1%, the Fund should rise approximately 0.5%, before fees and expenses. Similarly, on a day the Index rose 1%, the Fund should fall approximately 0.5%, before fees and expenses.

    Certain regulatory approvals will be required for the Funds to permanently pursue these new investment objectives. In the event that such approvals are not obtained, the Funds will consider other courses of action.

    As Vance Harwood (@6_Figure_Invest) noted earlier, these actions will reduce ‘termination event’ risk and should also help reduce rebalancing stresses around the end of the day.

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