ProShares UltraShort MSCI EAFE (EFU)

Overview

ProShares UltraShort MSCI EAFE (EFZ) seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the MSCI EAFE Index. It is designed for sophisticated investors seeking short-term hedging or aggressive trading strategies.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs, with a reputation for providing targeted exposure to specific market movements. They are known for reliable tracking of their stated objectives.

Management Expertise

ProShares has a dedicated management team with experience in managing complex and leveraged ETF products.

Goal

The goal of EFZ is to deliver two times the inverse of the daily performance of the MSCI EAFE Index.

Investment Approach and Strategy

Strategy: This ETF employs a leveraged inverse strategy, seeking to provide the opposite of the daily returns of the MSCI EAFE Index, magnified by a factor of two.

Composition The ETF uses financial instruments such as swap agreements, futures contracts, and other derivatives to achieve its leveraged inverse exposure.

Market Share: EFZ holds a small portion of the inverse and leveraged international equity ETF market.

Total Net Assets (AUM): 51785124

Key Competitors

• Direxion Daily MSCI EAFE Bear 3X Shares (WEBS)

Competitive Landscape

The competitive landscape is limited. EFZ and WEBS are the primary competitors. EFZ aims for -2x daily inverse while WEBS goes for -3x daily inverse of the MSCI EAFE Index, offering a different level of leverage. EFZ's lower leverage may appeal to investors seeking slightly less aggressive exposure.

Historical Performance: Historical performance is highly dependent on the MSCI EAFE Index's performance and is characterized by significant volatility due to its leveraged nature.

Benchmark Comparison: EFZ's performance is expected to be the inverse of the MSCI EAFE Index's daily performance, magnified by a factor of two. Due to compounding, long-term performance can deviate significantly from -2x the index's cumulative return.

Expense Ratio: 0.95

Average Trading Volume

EFZ's average daily trading volume is moderate, indicating adequate liquidity for many investors.

Bid-Ask Spread

The bid-ask spread varies, but is typically reasonable, although it can widen during periods of high volatility.

Market Environment Factors

Global economic conditions, geopolitical events, and currency fluctuations impacting the EAFE region significantly influence EFZ's performance.

Growth Trajectory

The ETF's growth trajectory depends on investor demand for inverse and leveraged strategies and the performance of the MSCI EAFE Index.

Competitive Edge

EFZ's competitive advantage lies in its established presence and recognition in the market for leveraged and inverse ETFs. It offers a readily available and liquid means for investors to express a short-term bearish view on the MSCI EAFE Index. ProShares' reputation for managing complex ETFs also provides a level of trust. However, daily compounding can lead to significant deviations from the target exposure over longer periods. These deviations can potentially surprise investors who do not understand the underlying mechanics.

Volatility

EFZ is highly volatile due to its leveraged nature and is subject to significant daily fluctuations.

Market Risk

The primary market risk is related to the MSCI EAFE Index. If the index increases, EFZ will decline by approximately two times that amount on a daily basis, plus fees and expenses. Compounding effects can create significant deviations from the stated objective over longer holding periods.

Ideal Investor Profile

EFZ is suitable for sophisticated investors with a high-risk tolerance who understand the complexities of leveraged and inverse ETFs. These investors typically use EFZ for short-term hedging or tactical trading strategies.

Market Risk

EFZ is not suitable for long-term investors. It is designed for active traders with a specific bearish outlook on the MSCI EAFE Index.

ProShares UltraShort MSCI EAFE (EFZ) is a leveraged inverse ETF designed for short-term tactical trading, providing two times the inverse of the daily performance of the MSCI EAFE Index. It's highly volatile and primarily suited for sophisticated investors who understand the complexities and risks of leveraged products. Long-term performance can deviate significantly from its stated objective due to compounding. Its value lies in providing a liquid and accessible way to express short-term bearish views on international equities.

Data Sources:

• ProShares website
• ETF.com
• Morningstar

Disclaimers:

The information provided is for informational purposes only and should not be considered financial advice. Past performance is not indicative of future results. Investors should consult with a qualified financial advisor before making any investment decisions. Leveraged and inverse ETFs are complex investment products and may not be suitable for all investors.