When companies do reverse splits on their shares, it's often seen as a Hail Mary pass by a stock that's circling the drain. When exchange-traded funds try the same move, it's often cheered.
That's yet another unusual feature of the ETF world, an industry that's rapidly approaching $2 trillion in assets.
There has been a steady stream of reverse splits in 2014, among the most recent being ProShares' announcement that it was performing a 1-for-4 split on 10 of its inverse and leveraged products. While many of the firm's short funds have declined in price since the Oct. 15 reverse splits, that's primarily because the sectors the funds covered have gained with a rising stock market. Conversely, those "short" funds benefit from market declines. Otherwise, the funds have shown little damage from the move.
A normal split sees investors get multiple shares per each they hold. An inverse does the opposite and is often used to prop up flagging prices for a struggling company.