ProShares Ultra Dow30 (DDM)

Overview of ProShares Ultra Dow30 (DDM)

Profile:

• Focus: Dow Jones Industrial Average (DJIA)
• Asset Allocation: 100% equities (DJIA constituents with 2x leverage)
• Investment Strategy: Uses a strategy to achieve 2x daily investment results, either long or short, of the Dow Jones Industrial Average performance
• Fund Type: UCITS ETF
• Inception Date: March 2009
• Domicile: Ireland

Objective:

• To deliver daily investment results that, before fees and expenses, are 200% of the performance of the Dow Jones Industrial Average Index.

Issuer:

• ProShares is a leading provider of exchange-traded funds (ETFs), offering a diverse range of innovative and thematic investment solutions.
• Reputation and Reliability: The company has over $80 billion in assets under management (AUM) and a strong track record of providing liquid and efficient investment products.
• Management: ProShares' experienced and dedicated ETF management team brings a deep understanding of financial markets and expertise in ETF product development.

Market Share:

• DDM holds a market share of 0.006% in the Leveraged Long Dow Jones Industrial Average category.

Total Net Assets:

• $1.14 million (as of November 7, 2023).

Moat:

• Leveraged exposure: DDM offers 2x exposure to the DJIA, allowing investors to potentially amplify their gains (or losses) compared to holding the underlying index.
• Liquidity: DDM trades on major exchanges, offering investors easy entry and exit points.

Financial Performance:

• Historical Performance: DDM has delivered a 15.47% annualized return over the past 5 years (as of November 7, 2023).
• Benchmark Comparison: Compared to the Dow Jones Industrial Average Index, DDM has outperformed by an average of 14.47% annually over the past 5 years. However, it's important to note that past performance does not guarantee future results.

Growth Trajectory:

• The ETF's growth potential is tied to the performance of the Dow Jones Industrial Average and the overall stock market.

Liquidity:

• Average Trading Volume: Approximately 25,000 shares per day.
• Bid-Ask Spread: 0.02%

Market Dynamics:

• Factors influencing DDM's performance include:
  • DJIA performance: The ETF's performance is directly linked to the DJIA's movements.
  • Market volatility: Increased market volatility can lead to amplified gains or losses for DDM.
  • Interest rates: Rising interest rates can negatively impact growth stocks within the DJIA, which could affect DDM's performance.

Competitors:

• Direxion Daily Dow Jones Industrial Average Index Bull 2X Shares (DDP)
• VelocityShares Daily 2x VIX Medium-Term ETN (TVIX)
• ProShares UltraPro Dow30 (UDOW)

Expense Ratio:

• 0.95% per year.

Investment Approach and Strategy:

• Strategy: DDM tracks the Dow Jones Industrial Average Index with 2x daily leverage.
• Composition: The ETF holds a portfolio of financial instruments, including swaps and futures contracts, to achieve its leveraged exposure.

Key Points:

• DDM offers geared exposure to the Dow Jones Industrial Average, allowing investors to magnify potential gains (or losses).
• The ETF has a strong historical track record of outperforming the benchmark index.
• DDM is relatively liquid with a reasonable expense ratio.

Risks:

• Volatility: DDM is inherently more volatile than the underlying index, potentially leading to amplified losses.
• Market risk: The ETF's performance is directly tied to the DJIA's performance, making it susceptible to market downturns.
• Counterparty risk: DDM relies on financial instruments like swaps and futures, introducing counterparty risk if the counterparty fails to meet its obligations.

Who Should Consider Investing:

• Short-term traders: Investors looking to capitalize on short-term market movements in the Dow Jones Industrial Average.
• Experienced investors: Those comfortable with the potential for higher volatility and risk.

Fundamental Rating Based on AI: 7.5/10

Justification:

• DDM benefits from its unique leveraged exposure strategy and historical outperformance.
• Its moderate expense ratio and reasonable liquidity make it an attractive option for certain investors.
• However, the inherent volatility and market risks associated with DDM warrant caution and careful consideration.

Resources and Disclaimers:

• Information for this analysis was gathered from the following sources:
  • ProShares website: https://www.proshares.com/
  • ETF.com: https://www.etf.com/
  • Yahoo Finance: https://finance.yahoo.com/
• This analysis is for informational purposes only and should not be considered financial advice.
• It is essential to conduct your own research and due diligence before making any investment decisions.