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Table of Contents

ProShares

By
Adam Hayes
Full Bio

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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Updated June 17, 2022
Reviewed by
Thomas Brock
Thomas Brock
Reviewed by Thomas Brock
Full Bio
Thomas J. Brock is a CFA and CPA with more than 20 years of experience in various areas including investing, insurance portfolio management, finance and accounting, personal investment and financial planning advice, and development of educational materials about life insurance and annuities.
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What Is ProShares?

ProShares, a division of ProFunds, manages various investment funds and has combined assets under management of over $60 billion. This makes it a small investment company compared to giant managers that have trillions in assets under management (AUM). Nonetheless, ProShares offers unique funds that track various indices and asset classes.

The company has dozens of exchange-traded fund (ETF) products, all designed according to specific speculative investment strategies. Short ProShares are inverse ETFs that move opposite to the market. Ultra ProShares is a family of leveraged ETFs that amplify market performance by a factor of two or three.

Key Takeaways

  • ProShares offers a range of pooled investments and specializes in ETF products.
  • ProShares has over 140 different products, including leveraged and inverse ETFs.
  • ProShares uses smart beta strategies that blend active and passive investing styles in an effort to enhance the benefits of both.
  • One of its most popular products is the Ultra S&P500, an ETF that seeks to double the performance of the S&P 500 Index.
  • Its inverse ETFs seek to increase in value as their benchmarks drop.

Understanding ProShares

Since 2006, ProShares has led the ETF revolution with an incredible offering of ETFs that "manage risk and enhance returns." A leader in dividend growth and geared (leveraged and inverse) investing, ProShares has consistently developed new products over the years.

ProShares' lineup of funds includes those focused on equities, fixed income, alternative investments, and volatility. The company puts a twist on these investments by offering both leveraged ETFs and inverse funds.

By combining low fees with tax efficiency in an asset that tracks an index, ETFs can build greater long-term savings than a comparable mutual fund. Beyond providing such savings, most ETFs aim to match the performance of a benchmark index. That means less frequent turnover within the fund and, thus, lower fees.

Leveraged ETFs seek to return a multiple of two or three relative to the actual performance of the asset or index being tracked to amplify daily or monthly returns. This can boost both potential returns and potential losses.

ProShares Offerings

ProShares offers over 140 different products across different asset classes, sectors, and market segments. Products that involve asset classes seek to track the investment performance of equities, fixed income, commodities, and real estate. Products that involve different industries and market segments follow emerging and developing markets as well as individual countries in Europe and Asia.

ProShares ETFs also employ popular smart beta strategies such as dividend growth to capture greater risk-adjusted returns than traditional market-cap indexes can achieve.

The ProShares Ultra VIX Short-Term Futures ETF (UVXY) is a popular product offered by ProShares. This fund seeks results that are 1.5 times the daily performance of the S&P 500 VIX Short-Term Futures Index. It provides leveraged exposure to the most followed volatility index.

Another example of a popular ProShares fund is the Ultra S&P500 (SSO). One of the first products offered by ProShares, this fund attempts to double the performance of the S&P 500 Index for a single day, as measured by sequential NAV calculations. The ProShares UltraPro Short S&P500 (SPXU) is a leveraged ETF that aims for a return that is three times the inverse of the daily performance of the S&P 500 Index.

What's an Exchange Traded Fund (ETF)?

An exchange traded fund is an investment security that pools investor funds (as a mutual fund does) and invests those funds in a diverse group of assets. Investors can buy and sell ETFs on an exchange, as the name implies.

What Is a Volatility ETF?

It's an ETF with the objective of achieving positive returns from decreases in the expected volatility of the S&P 500 Index. It follows the prices associated with VIX futures contracts. VIX is an acronym for a volatility index. Volatility ETFs are complicated investments and are suggested for experienced investors only.

What's an Inverse ETF?

An inverse ETF is an ETF that gains in value when the benchmark that it follows drops in value. Essentially, because it's constructed using derivatives, you can buy an inverse EFT and short the target market.

Article Sources
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  1. ProShares. "Home." Select About.

  2. ProShares. "Geared Investing: An Introduction to Leveraged and Inverse Funds," Page 2.

  3. ProShares. "Product Guide."

  4. ProShares. "UVXY Ultra VIX Short-Term Futures ETF."

  5. ProShares. "SSO Ultra S&P500."

  6. ProShares. "SPXU UltraPro Short S&P500."

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