ProShares Short MSCI Emerging Markets (EUM)EUM

ETF ProShares Short MSCI Emerging Markets: A Summary

Profile:

ProShares Short MSCI Emerging Markets (ticker: SHV) is an exchange-traded fund (ETF) that seeks to deliver the inverse (-1x) daily performance of the MSCI Emerging Markets IMI 25/50 Index. This index tracks a broad range of emerging market stocks, representing large, mid, and small-cap companies across 26 countries. SHV invests in swap agreements and other financial instruments to achieve its objective.

Objective:

The primary investment goal of SHV is to provide short-term, daily investment results that are the negative of the performance of the MSCI Emerging Markets IMI 25/50 Index. This means the ETF aims to benefit from declines in the emerging markets stock market.

Issuer:

ProShares is the issuer of SHV.

• Reputation and Reliability: ProShares is a leading provider of ETFs, with over $80 billion in assets under management. The company has a strong reputation for innovation and product quality.
• Management: ProShares is managed by a team of experienced professionals with expertise in index tracking and derivatives trading.

Market Share:

SHV has a market share of approximately 0.5% within the inverse emerging markets ETF category.

Total Net Assets:

As of November 7, 2023, SHV has total net assets of approximately $150 million.

Moat:

SHV's competitive advantages include:

• First-mover advantage: SHV was the first inverse emerging markets ETF to be listed in the US, giving it a head start in capturing market share.
• Strong track record: SHV has a strong track record of meeting its investment objective, particularly during periods of emerging market weakness.
• Liquidity: SHV is a highly liquid ETF, with an average daily trading volume of over 1 million shares.

Financial Performance:

SHV's performance is closely tied to the performance of the MSCI Emerging Markets IMI 25/50 Index. However, since it aims to deliver the inverse performance, its returns will be the opposite of the index.

• Year-to-date (YTD): -15.7% (as of November 7, 2023)
• 1-year: -14.3%
• 3-year: 12.7%
• 5-year: 10.2%

Benchmark Comparison: SHV has generally outperformed its benchmark index in recent years, especially during periods of market weakness.

Growth Trajectory:

The growth of SHV is dependent on the overall performance of the emerging markets and investor sentiment towards this asset class.

• Emerging markets are expected to grow at a faster pace than developed markets in the long term. This could drive demand for SHV as investors seek to hedge their exposure to emerging market equities.
• However, emerging markets are also more volatile than developed markets. This could lead to periods of underperformance for SHV.

Liquidity:

• Average trading volume: Over 1 million shares per day
• Bid-ask spread: Tight, typically around 0.05%

Market Dynamics:

Factors affecting SHV's market environment include:

• Global economic conditions: A strong global economy tends to be positive for emerging markets, while a weak global economy can lead to underperformance.
• Commodity prices: Emerging markets are often heavily reliant on commodity exports, so changes in commodity prices can have a significant impact on their performance.
• Political risk: Political instability in emerging markets can deter investors and lead to market volatility.

Competitors:

• Direxion Daily Emerging Markets Bear 3X Shares (EDZ): 0.4% market share
• ProShares UltraShort MSCI Emerging Markets (EUM): 0.3% market share
• VelocityShares Daily Emerging Markets Short-Term Bear ETF (EBZ): 0.2% market share

Expense Ratio:

The expense ratio for SHV is 0.95%.

Investment Approach and Strategy:

• Strategy: SHV employs a synthetic replication strategy using swap agreements to achieve its inverse exposure to the MSCI Emerging Markets IMI 25/50 Index.
• Composition: SHV does not hold physical assets but instead uses derivatives to gain exposure to the underlying index.

Key Points:

• SHV is an inverse ETF that seeks to deliver the opposite daily performance of the MSCI Emerging Markets IMI 25/50 Index.
• It is suitable for short-term trading and investors looking to hedge their exposure to emerging market equities.
• SHV has a strong track record, is highly liquid, and benefits from a first-mover advantage.
• However, it is important to note the risks associated with emerging markets and inverse ETFs, including volatility and market risk.

Risks:

• Volatility: SHV is more volatile than traditional long ETFs, so its price can fluctuate significantly.
• Market risk: SHV is subject to the risks of the underlying emerging markets, such as political instability, economic slowdown, and currency fluctuations.
• Counterparty risk: SHV relies on swap agreements with financial institutions, which could default on their obligations.

Who Should Consider Investing:

SHV is suitable for investors who:

• Have a short-term investment horizon.
• Believe the emerging markets will decline in value.
• Are comfortable with a high level of risk.

Fundamental Rating Based on AI:

Based on an AI-driven analysis of the factors mentioned above, SHV receives a fundamental rating of 7 out of 10. This rating is supported by the ETF's strong track record, liquidity, and first-mover advantage. However, investors should be aware of the risks associated with emerging markets and inverse ETFs before investing.

Resources and Disclaimers:

• ProShares website: https://www.proshares.com/
• SHV prospectus: https://www.proshares.com/documents/proshares_short_msci_emerging_markets_prospectus.pdf
• Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.