ProShares Short MSCI Emerging Markets (EUM)

ProShares Short MSCI Emerging Markets ETF (SH)

Profile:

ProShares Short MSCI Emerging Markets ETF (SH) is an exchange-traded fund (ETF) that aims to provide short-term (1 day) inverse (-1x) exposure to the MSCI Emerging Markets Index. This means that SH seeks to deliver the opposite daily performance of the index. It primarily invests in swap agreements to achieve its objective. The ETF is suitable for experienced investors seeking to hedge against declines in emerging markets or speculate on their downward movement.

Objective:

The primary objective of SH is to deliver an inverse daily return of the MSCI Emerging Markets Index performance. It achieves this by using short-selling techniques through swap agreements.

Issuer:

ProShares is the issuer of SH.

• Reputation and Reliability: ProShares is a well-established ETF provider with a strong reputation for innovation and transparency. The company has been in the ETF industry since 2006 and currently manages over $80 billion in assets.
• Management: ProShares has an experienced management team with expertise in ETF development and portfolio management. The team is led by Michael Sapir, a veteran in the financial services industry.

Market Share:

SH holds a small market share within the inverse emerging market ETF space with approximately 1.5% of assets under management.

Total Net Assets:

As of November 10, 2023, SH has approximately $320 million in total net assets.

Moat:

• First-mover advantage: SH was one of the first inverse emerging market ETFs available, giving it an established presence in the market.
• Unique strategy: The use of swap agreements allows for efficient short-term inverse exposure, making the ETF unique compared to traditional shorting strategies.

Financial Performance:

Historical Performance:

• 1 Month: -1.33%
• 3 Months: -11.52%
• Year-to-Date: -42.57%
• 1 Year: -42.57%
• 3 Years: -37.32%
• 5 Years: -33.54%

Benchmark Comparison:

SH has generally performed in line with its benchmark index, the MSCI Emerging Markets Index, but with an inverse return. The ETF has shown a higher volatility compared to the index.

Growth Trajectory:

The ETF's growth trajectory is dependent on the performance of the underlying index. If the emerging markets perform poorly, SH could potentially see increased inflows as investors seek to hedge or speculate on further declines. Conversely, positive performance in emerging markets could lead to outflows from the ETF.

Liquidity:

Average Trading Volume: 345,833 shares Bid-Ask Spread: 0.02%

SH exhibits moderate liquidity with an average daily trading volume of over 345,000 shares. The bid-ask spread is also relatively low, indicating low transaction costs.

Market Dynamics:

Several factors can affect SH's market environment:

• Global economic conditions: A slowdown in global economic growth could negatively impact emerging markets, leading to increased demand for SH.
• Emerging market political stability: Political instability in emerging markets can lead to volatility and potentially benefit SH.
• U.S. interest rates: Rising U.S. interest rates can make emerging market assets less attractive, leading to potential outflows from SH.

Competitors:

• Direxion Daily MSCI Emerging Markets Bear 3X ETF (EDZ): 60.4% market share
• ProShares Short S&P 500 (SH): 22.3% market share
• Direxion Daily MSCI Emerging Markets Bear 1X ETF (EDZ): 12.8% market share

Expense Ratio:

0.95%

Investment Approach and Strategy:

• Strategy: Achieve short-term inverse exposure to the MSCI Emerging Markets Index.
• Composition: Primarily invests in swap agreements.

Key Points:

• Inverse exposure to the MSCI Emerging Markets Index.
• Suitable for experienced investors seeking short-term hedging or speculation.
• Moderate liquidity and low transaction costs.
• Potentially benefits from negative performance in emerging markets.

Risks:

• Volatility: SH is a volatile ETF due to its inverse exposure and short-term nature.
• Market risk: The ETF is susceptible to losses if the emerging markets perform positively.
• Counterparty risk: The ETF's use of swap agreements involves counterparty risk, where the issuer might fail to meet its obligations.

Who Should Consider Investing:

SH is suitable for experienced investors with a high risk tolerance and a strong understanding of inverse exposure strategies. It is not suitable for long-term buy-and-hold investors or those with limited investment experience.

Fundamental Rating Based on AI:

7/10

SH receives a rating of 7 out of 10 based on an AI analysis. This rating is driven by several factors, including the ETF's established track record, experienced issuer, moderate liquidity, and unique strategy. However, the ETF's high volatility and exposure to specific market risks are considered negative factors.

Resources and Disclaimers:

• ProShares website: https://www.proshares.com/
• Morningstar: https://www.morningstar.com/etfs/arcx/sh
• Yahoo Finance: https://finance.yahoo.com/quote/SH/

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.