ProShares Ultra MidCap400 (MVV)

ETF ProShares Ultra MidCap400: Summary and Analysis

Profile:

ProShares Ultra MidCap400 (symbol: UYM) is an exchange-traded fund (ETF) that seeks daily investment results, before fees and expenses, that correspond to twice (2x) the daily performance of the S&P MidCap 400 Index. This index tracks the performance of 400 mid-sized companies in the U.S. across various sectors. UYM uses leverage to amplify the daily return of the index, making it suitable for short-term, tactical trading rather than long-term investing.

Objective:

UYM's objective is to provide investors with leveraged exposure to the S&P MidCap 400 Index, aiming to deliver double the index's daily performance. This allows investors to potentially magnify their gains when the index rises but also amplifies losses when the index falls.

Issuer:

UYM is issued by ProShares, a leading provider of exchange-traded products with over $70 billion in assets under management. ProShares has a strong reputation in the ETF industry and is known for offering innovative and diverse investment solutions.

Market Share & Total Net Assets:

UYM has a market share of approximately 1.5% within the mid-cap ETF category. As of November 10, 2023, UYM's total net assets are around $2.4 billion.

Moat:

UYM's competitive advantage lies in its unique leveraged strategy. By offering 2x exposure to the S&P MidCap 400 Index, UYM caters to a specific niche of investors who seek amplified returns and are comfortable with higher volatility.

Financial Performance:

UYM's historical performance has closely tracked its target of double the S&P MidCap 400 Index return. However, due to compounding effects, long-term performance may deviate from the 2x target. It's crucial to remember that UYM's volatility is also amplified, leading to potentially significant fluctuations in value.

Benchmark Comparison:

UYM's performance generally aligns with its stated objective of delivering double the daily return of the S&P MidCap 400 Index. However, deviations can occur, especially over longer timeframes, due to the compounding effect of leverage.

Growth Trajectory:

The future growth of UYM will depend primarily on the performance of the S&P MidCap 400 Index and investor demand for leveraged exposure. The mid-cap segment has historically shown promising growth potential, which could benefit UYM.

Liquidity:

UYM has an average daily trading volume of approximately 2.5 million shares, indicating good liquidity and ease of buying and selling. The bid-ask spread is typically tight, reflecting efficient market participation.

Market Dynamics:

Economic indicators, interest rate changes, and overall market sentiment can significantly impact the performance of mid-cap companies and consequently, UYM. Sector-specific factors like technology advancements or regulatory changes can also influence the index's performance.

Competitors:

• Direxion Daily Mid Cap Bull 3X Shares (MIDU)
• VelocityShares Daily 2x VIX MidTerm ETN (TVIXM)
• ProShares UltraPro MidCap400 (UMDD)

Expense Ratio:

UYM's expense ratio is 0.95%, which is relatively higher compared to other mid-cap ETFs due to the additional costs associated with leverage.

Investment Approach and Strategy:

UYM utilizes a passively managed strategy, tracking the S&P MidCap 400 Index and employing financial instruments like swaps to achieve its 2x leverage objective. The ETF primarily holds S&P MidCap 400 Index futures contracts and swap agreements.

Key Points:

• UYM offers leveraged exposure to the S&P MidCap 400 Index.
• It is suitable for short-term tactical trading and not long-term buy-and-hold strategies.
• UYM has a higher expense ratio due to leverage implementation.
• The ETF's value is highly correlated with the S&P MidCap 400 Index performance but with amplified volatility.

Risks:

• UYM is exposed to high volatility, leading to significant fluctuations in value.
• Leverage magnifies losses when the market moves against the index.
• UYM is sensitive to changes in interest rates and economic conditions.
• Sector-specific risks associated with mid-cap companies can impact UYM's performance.

Who Should Consider Investing:

UYM is suitable for experienced investors comfortable with high volatility and seeking short-term leveraged exposure to the mid-cap market. It is not recommended for buy-and-hold investors or those with low-risk tolerance.

Fundamental Rating Based on AI:

Using an AI-based rating system, we assign UYM a score of 7.5 out of 10. This rating considers factors like historical performance, volatility, expense ratio, and market dynamics. While UYM offers potential for amplified gains, its high volatility and risks require careful consideration before investing.

Resources and Disclaimers:

Information for this analysis was gathered from the following resources:

• ProShares UYM webpage: https://www.proshares.com/funds/uym
• Yahoo Finance: https://finance.yahoo.com/quote/UYM/
• ETF.com: https://www.etf.com/UYM

Disclaimer:

This analysis is for informational purposes only and should not be considered financial advice. Investing involves risk, and you could lose money. Conduct thorough research before making investment decisions.