Barclays Plc, the bank behind the iPath and ETN+ families of exchange-traded notes, will redeem the iPath Short Enhanced MSCI EAFE ETN (MFSA | N/A) after the security’s automatic redemption feature was triggered—a function of the inverse ETN’s falling price as global stock markets were rising.
The ETN, which will be redeemed on Sept. 17, hit its automatic redemption level of $37.50 a share on Sept. 10, Barclays said in a press release. The ETN shares will be redeemed at that share price.
The ETN came to market in November 2010 and, while it did perform well as Europe soldiered through a debt crisis that was in full bloom between MFSA’s launch and last summer, its share price began cascading downward beginning last autumn as investor sentiment on Europe improved. It has lost almost two-thirds of its value in the past year, while the MSCI EAFE index has climbed 18 percent.
The MSCI EAFE index around which MFSA is organized is more than 50 percent concentrated on European securities. The index targets developed-world equities outside of North America.
While the ETN had but $1.88 million in assets, it’s possible Barclays will issue a new version of the ETN, as it has done in the past with other products that hit their automatic redemption feature.