Definition of ProShares

What is ProShares?

ProShares is a division of ProFunds Group which manages several mutual funds with combined assets under management of around $ 58 billion. This makes it a small investment company compared to other giant asset managers who manage much more. However, ProShares offers unique funds that track various indices and asset classes.

The company offers dozens of exchange-traded fund (ETF) products, all designed to perform specific speculative investment strategies. Short ProShares are inverse ETFs that move opposite the market, while 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 joint investments, specialized in ETF products.
  • ProShares includes more than 140 different products, including leveraged and inverse ETFs, with one of its most popular products being the Ultra S&P 500 that seeks to double the performance of the S&P 500.
  • ProShares also offers smart beta strategies, a combination of active and passive investing that attempts to accentuate the benefits of both investment styles.

Understanding ProShares

ProShares has been at the forefront of the ETF revolution since 2006 and now offers one of the largest ETF lines. The company is a leader in strategies such as dividend growth, interest rate hedged bonds, and targeted ETF investments (leveraged and inverse). ProShares continues to innovate with products that provide strategic and tactical opportunities for investors to manage risk and improve returns.

The ProShares line of funds includes equities, fixed income, alternatives and volatility. The company puts a twist on these investments by offering leveraged ETFs and mutual funds. By combining low fees with tax efficiency on an asset that tracks an index, ETFs can generate greater long-term savings than a comparable mutual fund. Beyond savings, most ETFs aim to match the performance of a benchmark index, which means less frequent turnover within the fund and therefore lower fees.

Leveraged ETFs seek to return a multiple of two or three relative to the actual performance of the asset or index that is tracked to amplify daily or monthly returns, which can drive both returns and potential losses.

ProShares Deals

ProShares offers more than 140 different products in different asset classes, sectors and market segments. Asset class-based products seek to track investment progress in equities, fixed income, commodities, and real estate, while sectors looking at 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 higher risk-adjusted returns than traditional market capitalization ratios.

ProShares Trust Ultra VIX Short-Term Futures ETF (UVXY) is a popular product offered by ProShares. This fund seeks to double the daily performance of the S&P 500 VIX Short-Term Futures Index. Provides leverage exposure to the volatility index most often.

Another example of a popular ProShares fund is the 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 by sequential NAV calculations. The ProShares Ultra Short S&P 500 (SPXU) is a leveraged ETF that targets a return that is three times the inverse of the daily performance of the S&P 500 index.

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Mark Holland

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