Direxion Sets Reverse Splits On 6 ETFs

Direxion, the Newton, Mass.-based fund company known for its triple-exposure ETFs, is planning 1-for-5 reverse splits on five of its ETFs and a 1-for-3 reverse split on a sixth ETF, in a move that will decrease the number of shares and raise their prices.

The five ETFs that will undergo 1-for-5 reverse split are:

1. Direxion Daily Financial Bear 3x Shares (NYSEArca: FAZ )
2. Direxion Daily Large Cap Bear 3x Shares (NYSEArca: BGZ )
3. Direxion Daily Mid Cap Bear 3x Shares (NYSEArca: MWN )
4. Direxion Daily Developed Markets Bear 3x Shares (NYSEArca: DPK )
5. Direxion Daily Semiconductor Bear 3x Shares (NYSEArca: SOXS )

The 1-for-3 reverse split will occur on the Direxion Daily Small Cap Bear 3x Shares (NYSEArca:TZA - News), the company said in a press release.

All the reverse splits apply to shareholders of record after the close on Feb. 23, and post-split shares will be available to investors on Feb. 24, the company said.

Direxion Shares Announces Reverse Share Split of ETF

Direxion announced today that it will execute a 1-for-10 reverse split of the shares of Direxion Daily Emerging Markets Bear 3x Shares ETF (EDZ) for shareholders of record after the close of the markets on Wednesday, March 3, 2010. EDZ shares will begin trading on NYSE Arca, Inc. (NYSE Arca) on a split-adjusted basis on Thursday March 4, 2010.

As a result of the EDZ 1-for-10 reverse split, every ten shares of EDZ will be exchanged for one share. Accordingly, the number of EDZ shares issued and outstanding, will decrease by approximately 90% and the net asset value ("NAV") and price of each share at the opening of the markets on Thursday March 4, 2010 will increase 10-fold.

This isn't the first time Direxion has executed reverse splits in severely decayed products. On June 22, it executed a 1-for-2 reverse split of its Direxion Daily Mid-Cap Bear 3x Shares, that took shares from $30 to $60. On July 9, 2008, Direxion executed a reverse split in both its Direxion Daily Financial Bull 3X Shares ETF and its Direxion Daily Financial Bear 3X Shares ETF. FAZ's 1-for-10 reverse split took the shares from $5.12 to $51.20.

New Emerging Market Funds Aim for Hot Spot

Over the past two weeks, eight emerging market ETFs have been introduced.

Lisle, IL-based Claymore Securities has just debuted the Claymore China Technology ETF (NYSEArca:CQQQ). The fund contains 34 holdings with exposure to large cap (19%), mid cap (33%) and small cap (48%) stocks. The AlphaShares China Technology Index serves as the fund’s underlying benchmark and the index is rebalanced semi-annually. CQQQ has an annual expense ratio of 0.70%.

Old Mutual Global introduced GlobalShares FTSE Emerging Markets Index Fund (NYSEArca: GSR). In its attempt to attract assets, the company won’t charge expenses to shareholders through January 21, 2010. Thereafter, GSR’s annual expense ratio will be 0.39%. The fund is benchmarked to the FTSE Emerging Markets Index and it contains around 300 holdings.

Last week Direxion Shares added four leveraged ETFs with market exposure to Chinese and Latin American stocks.

The Direxion Daily China Bull 3x Shares (NYSEArca: CZM) and the Direxion Daily Latin America 3x Bull Shares (NYSEArca: LBJ) attempt to triple the daily performance of their underlying benchmarks. In contrast, the Direxion Daily China Bear 3x Shares (NYSEArca: CZI) and the Direxion Daily Latin America 3x Bear Shares (NYSEArca: LHB) aim for three times opposite daily performance of their respective indexes.

“The emerging markets sector is increasingly tradeable in today’s evolving global investment landscape,” stated Dan O’Neill, Direxion Shares’ President. “Our Latin America mutual fund has been our largest mutual fund for some time, and our Daily Emerging Markets 3x ETFs have experienced heavier average volume recently. Tremendous trading opportunities appear to be underway in this space.”

The new Direxion ETFs will charge annual expenses between 0.94 to 0.95%.

In related news, Global X Funds introduced two Chinese sector funds. The Global X China Consumer ETF (NYSEArca: CHIQ) and the Global X China Industrials ETF (NYSEArca: CHII) are linked to publicly traded companies in narrow industries within China’s developing economy. Both funds follow indexes created by Structured Solutions AG and charge annual expenses of 0.65%.

Tripling China, Latin America

Direxion, which specialized in leveraged ETFs, released four triple-leveraged funds that track China and Latin America.

They're designed to provide 300% of the negative and positive daily return of the BNY China Select ADR Index and S&P Latin America 40 Index.

1. Direxion Daily China Bull 3X (CZM).

2. Direxion Daily Latin America 3x Bull (LBJ).

3. Direxion Daily China Bear 3x (CZI).

4. Direxion Daily Latin America 3x Bear (LHB).