Inverse and leveraged exchange-traded fund provider Direxion has announced its decision to close and liquidate twelve ETFs, each providing investors with a targeted sector play.
The last day of trading in the funds is scheduled for 25 September 2017.
The funds all trade on NYSE Arca. Eight of the funds offer unleveraged exposure while two offer double- and two offer triple-leveraged returns. Furthermore, all but one of the funds scheduled for closure provide inverse exposure to their underlying index, indicating the effect the ongoing bull market in equities has had on demand for bearish products.
The decision to close the funds was made based on the recommendation of Direxion Shares ETF Trust’s advisor Rafferty Asset Management. Rafferty noted that, due to the inability to attract sufficient investment assets, the funds would likely be unable to conduct their business and operations in an economically efficient manner.
As such, the funds will no longer be open to purchase by investors after the close of regular trading on 25 September 2017. From 26 September 2017 through 2 October 2017, shareholders may only be able to sell their shares to certain broker-dealers as the funds begin their liquidation process. During this period, the liquidation process will result in each fund increasing its cash holdings and, as a consequence, will likely cease to deliver its intended exposure.
From 2 October 2017, the funds will liquidate their assets and distribute cash pro rata to all remaining shareholders who have not previously redeemed or exchanged their shares. Direxion notes these distributions will be taxable events.
The funds scheduled for closure are outlined below:
Direxion Daily Consumer Staples Bear 1X Shares (SPLZ)
Direxion Daily Energy Bear 1X Shares (ERYY)
Direxion Daily Financial Bear 1X Shares (FAZZ)
Direxion Daily Gold Miners Index Bear 1X Shares (MELT)
Direxion Daily MSCI European Financials Bear 1X Shares (EUFS)
Direxion Daily S&P Biotech Bear 1X Shares (LABS)
Direxion Daily Technology Bear 1X Shares (TECZ)
Direxion Daily Utilities Bear 1X Shares (UTLZ)
Direxion Daily Cyber Security & IT Bull 2X Shares (HAKK)
Direxion Daily Silver Miners Index Bear 2X Shares (DULL)
Direxion Daily Healthcare Bear 3X Shares (SICK)
Direxion Daily Homebuilders & Supplies Bear 3X Shares (CLAW)