The ProShares UltraPro Short S&P 500 (SPXU) is a leveraged inverse exchange traded fund (ETF) that aims at a return that is three times the inverse of the daily performance of the S&P 500 Index.

Like any inverse ETF, the fund is designed to move in the opposite direction of the S&P 500, using leveraged investments such as short sales and futures contracts. SPXU is, in fact, one of the most aggressive of these funds.

Between the fund's inception on June 23, 2009 and May 2020, SPXU had an annualized market return of negative 43%. In early 2020, the fund's share price reached a high point of $41.53 in late March before sinking to $16.27 on April 17.

Key Takeaways

  • The ProShares UltraPro Short S&P 500 (SPXU) is one of the most aggressive leveraged inverse ETFs available to investors.
  • SPXU seeks to replicate the moves of the S&P 500, but in the opposite direction and multiplied by three.
  • SPXU is not suitable for long-term investing and is meant to be held for one day or less.

How SPXU Works

To provide three times the inverse daily exposure to the S&P 500 Index, SPXU holds swaps from multiple counterparties and futures contracts. The fund's top holdings are S&P 500 swaps from the big banks.

Since SPXU invests in financial instruments with few counterparties, it is considered a non-diversified fund. This may cause the credit of these counterparties to impact SPXU's performance.

Like all leveraged ETFs, SPXU should be held for no longer than one day due to the compounding of daily returns. The fund's exposure level varies day-to-day due to the daily rebalancing of the portfolio.


SPXU was issued by ProShares on June 23, 2009. The ProShares UltraPro Short S&P 500 ETF is listed on the New York Stock Exchange Arca. Speculative traders can trade it on a number of platforms.

The fund is legally structured as an open-ended investment company, and its adviser is ProShares Advisors. The fund has assets under management of $1.3 billion as of June 2020.

SPXU has a relatively high expense ratio of 0.91%, and that does not include trading and broker fees, which vary. The fund's high expense ratio can be attributed to its daily rebalancing.

Suitability and Recommendations

No matter what they invest in, traders and investors are exposed to a multitude of risks, such as correlation risk, equity risk, market risk, intraday price-performance risk, counterparty risk, and non-diversification risk when trading SPXU.

The ProShares UltraPro Short S&P 500 ETF carries greater risks than most.

The Risks of Leveraging

SPXU allows traders to place single-day trades against the S&P 500 Index. Since the ProShares UltraPro Short S&P 500 ETF uses leverage in its goal of delivering three times the inverse daily return of the S&P 500 Index, it should be considered extremely risky and not suitable for everyone. 

Modern portfolio theory suggests that SPXU is best suited to speculative traders who are bearish on the S&P 500 Index.

SPXU has an alpha, against the S&P 500 Total Return Index, of negative 4.74. Its beta is negative 2.9 and its R-squared is 99.2. The SPXU Sharpe ratio is negative 1.15.

Based on Modern Portfolio Theory (MPT), the fund's alpha indicates it underperformed the S&P 500 Total Return Index by an annualized 4.74% over the last five years. The fund's beta indicates it is inversely correlated to and theoretically more volatile than the S&P 500 Total Return Index. This may indicate that SPXU carries more risk.

Weighing Reward vs. Risk

The fund's R-squared of 99.2 indicates that 99.2% of its past price fluctuations can be explained by fluctuations in its benchmark index. The fund's Sharpe ratio of negative 2.9 indicates the fund has done poorly in providing investors with an adequate return given the degree of risk taken. The fund's negative Sharpe ratio indicates it underperformed securities that return the risk-free rate.

According to MPT, SPXU is best suited to speculative traders and investors who monitor their positions daily and are bearish on the S&P 500 Index.

If an investor is extremely bearish on the index and wants leveraged inverse exposure for more than one day, the positions need to be adjusted daily.