DEFINITION of ProShares
ProShares is a division of ProFunds Group that manages various investment funds with combined assets under management of $29 billion. This makes it a small provider compared to the giant asset managers running over $1 trillion. Nonetheless, ProShares offers unique funds that track different strategies and asset classes.
The company also offer dozens of different ETF products, all designed to perform specific speculative investment strategies. They are divided into three categories: short, ultra and alpha. Short ProShares behave inversely to the market, while Ultra ProShares amplify market performance by a factor of two. The Alpha fund tracks the performance of the Credit-Suisse Index.
BREAKING DOWN ProShares
ProShares' lineup of funds includes equities, fixed income, alternative, and volatility. ProShares puts a twist on these investments by offering both leveraged and inverse funds. Leveraged ETFs applies a multiple of two or three to gain more robust daily or monthly returns than the underlying index. Conversely, inverse ETFs are designed to track an underlying index with a negative multiplier. The fund succeeds when the underlying asset performs poorly and during a bull market, the ETF will struggle. Geared funds (inverse and leveraged) are constructed for investors to take hedging and speculative positions without having to purchase derivatives. ProShares trade like any other ETF and can be purchased and sold like stocks.
By combining low fees with tax efficiency in an asset that seeks tracks an index, ETFs can build greater longer term savings than a comparable mutual fund. Beyond savings, most ETFs aim to match the performance of a benchmark index, meaning less frequent turnover within the fund and thus lower fees.
Examples of ProShares Exchange-Traded Funds (ETF)
ProShares offer over 140 different products across different asset classes, sectors, and market segments. Products grounded in asset classes seek to track the investment progress of equities, fixed income, commodities, and real estate, whereas sectors observe 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 like dividend growth to capture greater risk-adjusted returns than traditional market cap indexes. Below are some popular products under the ProShares umbrella:
- Ultra VIX Short-Term Futures ETF (UVXY): This fund seeks to double the daily performance of the S&P 500 VIX Short-Term Futures Index. It provides leverage exposure to the most followed volatility index.
- Ultra S&P 500 (SSO): One of the first products offered by ProShares, this fund attempts to double the returns of the S&P 500 Index for a single day, as measured from sequential NAV calculations.