Rydex to Shut Down Leveraged, Inverse ETFs
Tuesday, April 27th, 2010Michael Johnston submits:
Leveraged and inverse ETFs have a surge in popularity in recent years, as risk hungry investors embraced these vehicles as a means of achieving a number of different investment goals. But Rydex, one of the earliest ETF issuers to offer these products, has largely missed out on this boom. The Rockville, Maryland-based firm announced last week that it will close the doors on 12 of its leveraged and inverse ETFs, eliminating all but two of the products in its ETF family. Friday, May 21 will be the last day of trading for the following ETFs:
- Rydex 2x Russell 2000 ETF (RRY)
- Rydex 2x S&P MidCap 400 ETF (RMM)
- Rydex Inverse 2x Russell 2000 ETF (RRZ)
- Rydex Inverse 2x S&P MidCap 400 ETF (RMS)
- Rydex 2x S&P Select Sector Energy ETF (REA)
- Rydex 2x S&P Select Sector Financial ETF (RFL)
- Rydex 2x S&P Select Sector Health Care ETF (RHM)
- Rydex 2x S&P Select Sector Technology ETF (RTG)
- Rydex Inverse 2x Select Sector Energy ETF (REC)
- Rydex Inverse 2x Select Sector Financial ETF (RFN)
- Rydex Inverse 2x Select Sector Health Care ETF (RHO)
- Rydex Inverse 2x Select Sector Technology ETF (RTW)
The 12 ETFs being closed have aggregate assets of about $129 million, or less than 2% of total assets in Rydex ETFs. The two leveraged ETFs staying open, the Rydex 2x S&P 500 ETF (RSU) and Rydex Inverse 2x S&P 500 ETF (RSW), had assets of about $108 million and $90 million, respectively, at the end of the first quarter. ProShares and Direxion are the biggest players in the leveraged and inverse ETF space, with assets of about $24.5 billion and $5.0 billion, respectively, at the end of the first quarter.
