Volatility ETN to Face 1:10 Reverse Split (TVIX, VXX)

One of the most popular volatility ETFs is going to undergo a reverse split next week.

The VelocityShares Daily 2X VIX Short Term ETN (TVIX) will execute a 1:10 reverse split on March 16.

This will not be the first reverse split for the popular trading instrument. TVIX saw a 1:25 reverse split on August 2016, which has helped the fund remain listed despite a 99.98 percent decline in value since its inception in Dec. 2010.

While the fund has seen rising trading in recent days, its average trading volume of 9.33 million is far less than the 40 million average daily volume seen by the iPath S&P 500 VIX ST Futures ETN (VXX). As a result of its higher profile, VXX tends to trade more actively in both pre-market and after hours trading. VXX was currently down 1.5 percent in trading before the bell on Friday, while TVIX was nearly flat from the prior day's close on low volume.

Both VXX and TVIX have seen price evisceration throughout trading in 2017. VXX is down 32.3 percent year to date, while TVIX has fallen 55.5 percent.

Those steep declines are the result of lower market volatility as investors seem less risk averse despite rising stock valuations. The CBOE Volatility Index, or VIX, has fallen 12.4 percent year to date to 11.90 but remains above its 52-week low of 9.97, which is the lowest level the index has seen since its inception.

The weakness in volatility has been a boon for the VelocityShares Daily Inverse VIX Short Term ETN (XIV), which attempts to short VIX futures in order to have an inverse return to the volatility index. XIV is up 44.5 percent year to date with very few drawdowns and has risen 217.7 percent in the last year. The note has also outperformed almost all other stocks and ETFs in the last five years, having risen 629.5 percent in that period. (For related reading, see "Overview of VelocityShares TVIX")

XIV has not had a split or reverse split in the last five years, while both VXX and TVIX have faced several reverse splits.

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