Rydex|SGI announced the closing and liquidation of 12 of the firm’s 14 leveraged and inverse exchange traded funds. Friday, May 21, 2010 will be the last day of trading. As always, I encourage shareholders to avoid the liquidation process by selling positions prior to the delisting and to use a limit order when doing so.
According to the press release, the affected funds account for approximately $129 million in assets, or less than 2% of Rydex|SGI’s total $7 billion in ETF assets under management. The funds will be delisted after the market close on May 21 with final liquidation occurring a week later. Shareholders remaining in the funds on May 28, 2010 will not be charged any transaction fees. However, the net asset value of each affected fund on May 28, 2010 will reflect the costs of closing that fund.
The six pairs being closed are the +200% and -200% ETFs targeting mid-caps, small-caps, energy, financial, health care, and technology stocks. The closure will not affect the Rydex 2x S&P 500 (RSU), Rydex Inverse 2x S&P 500 (RSW), or any of their 26 non-leveraged ETFs. The closing funds are:
- Rydex 2x S&P MidCap 400 ETF (RMM)
- Rydex Inverse 2x S&P MidCap 400 ETF (RMS)
- Rydex 2x Russell 2000 ETF (RRY)
- Rydex Inverse 2x Russell 2000 ETF (RRZ)
- Rydex 2x S&P Select Sector Energy ETF (REA)
- Rydex Inverse 2x Select Sector Energy ETF (REC)
- Rydex 2x S&P Select Sector Financial ETF (RFL)
- Rydex Inverse 2x Select Sector Financial ETF (RFN)
- Rydex 2x S&P Select Sector Health Care ETF (RHM)
- Rydex Inverse 2x Select Sector Health Care ETF (RHO)
- Rydex 2x S&P Select Sector Technology ETF (RTG)
- Rydex Inverse 2x Select Sector Technology ETF (RTW)
I consider these closings an aggressive move by Rydex, as only four of them were on my most recent ETF Deathwatch list. However, they’ve been on the market for nearly two years, and Rydex has chosen to “focus resources on those products that have demonstrated the most marketplace demand.” Affected shareholders should be able to find suitable substitutes in the ProShares product lineup.
Disclosure covering writer, editor, publisher, and affiliates: 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.