4 ETFs Possibly Headed for Reverse Splits (NUGT, VXX)

Reverse splits rarely work out in favor in the security that is being split, but these transactions are a fact of life in the financial markets. That is especially true regarding

. Investors may have become accustomed to reverse splits for leveraged ETFs over the years, but

. Just this year, the U.S. Natural Gas Fund

, the Guggenheim Solar ETF

and the Market Vectors Solar Energy ETF

, all traditional long ETFs, have engineered reverse splits. Only UNG has performed well and that has nothing to do with the split and everything to do with improved sentiment toward natural gas. Those that do not like reverse splits would do well to avoid the following exchange-traded products. Please note this is speculation that these products

undergo reverse splits. There has been no confirmation as of yet that the sponsors will reverse split these products.

The iPath S&P 500 VIX Short-Term Futures ETN, perhaps the most widely known volatility ETN on the market today, is getting close to a stay at the reverse split hotel. A 63 percent year-to-date decline will do that. A reverse split for VXX could be a good thing - for short sellers. VXX has plunged more than 91 percent since a 1-for-4 reverse split went into effect on November 9, 2010. The harsh reality is almost any volatility ETN could be subject to a reverse split as nearly all of them have terrible charts. The infamous VelocityShares Daily 2x VIX Short-Term ETN

is another prime example.

It is hard to say anything nice about GAZ, which is arguably a broken product. Looking at the charts of GAZ and UNG side by side would leave plenty of investors scratching their heads. In the past three months, GAZ is down 14.4 percent while UNG has surged nearly 46 percent. A reverse split could be on the way for GAZ, but that will not make things any better.

Again, it must be noted that PowerShares has not announced a reverse split for the PowerShares WilderHill Clean Energy ETF. It should also be noted that PBW has a chart that looks a lot like those of the solar funds. That is a cruel twist of a fate. In theory, President Obama winning in 2008 should have resulted in great things for alternative energy equities and ETFs. In reality, PBW has plunged 49 percent since late January 2009.

The Direxion Daily Gold Miners Bull 3X Shares is an easy call for a potential reverse split because the product has two things working against it. First, it is leveraged. Second, it tracks a sub-sector of the materials space that just keeps on disappointing investors. NUGT has lost 77.5 percent of its value since debuting in December 2010. For more on troubled ETFs, click

.