ProShares Ultra MidCap400 (MVV)

ProShares Ultra MidCap400 (UMDD)

Profile

Focus: The ProShares Ultra MidCap400 (UMDD) is an exchange-traded fund (ETF) that seeks daily investment results that, before fees and expenses, are 200% of the daily performance of the MidCap 400 Index. This index tracks the performance of 400 U.S. mid-cap companies. UMDD uses a leveraged investment approach to achieve its objective.

Asset Allocation: UMDD invests in swap agreements and other financial instruments that track the MidCap 400 Index. Essentially, it holds a portfolio of derivatives that provide exposure to the index's performance.

Investment Strategy: UMDD employs a leveraged strategy, meaning it uses debt or derivatives to amplify its exposure to the MidCap 400 Index. This strategy aims to magnify the index's daily performance by 200%.

Objective

The primary investment goal of UMDD is to provide investors with double the daily return of the MidCap 400 Index, before fees and expenses. This ETF caters to investors seeking aggressive exposure to the performance of mid-cap U.S. companies.

Issuer

ProShares is the issuer of UMDD.

Reputation and Reliability: ProShares is a well-established ETF provider with a strong reputation in the market. It manages over $80 billion in assets across a diverse range of ETFs.

Management: The ProShares ETF Trust is overseen by a Board of Trustees, which includes experienced professionals from the financial industry. The ETF is actively managed by a team of portfolio managers with expertise in index tracking and leveraged investment strategies.

Market Share

UMDD holds a market share of approximately 0.5% within the mid-cap ETF segment. While not the largest player, it enjoys a solid presence in the market.

Total Net Assets

As of November 2023, UMDD has total net assets of approximately $1.5 billion.

Moat

UMDD's competitive advantages include:

• Leveraged Strategy: The ability to magnify the index's performance can be attractive to investors seeking aggressive returns.
• Liquidity: UMDD enjoys healthy trading volume, making it easier for investors to buy and sell shares.
• Established Issuer: ProShares' reputation and experience in the ETF market provide investor confidence.

Financial Performance

Historical Performance: UMDD has delivered strong historical returns, exceeding the performance of the MidCap 400 Index. However, it's important to note that due to its leveraged nature, UMDD also experiences higher volatility.

Benchmark Comparison: UMDD generally outperforms the MidCap 400 Index, but with amplified volatility. Investors should be aware of the increased risk associated with leveraged strategies.

Growth Trajectory

The growth of UMDD is closely tied to the performance of the MidCap 400 Index and investor demand for leveraged exposure. The mid-cap segment has historically exhibited strong growth potential, which could benefit UMDD.

Liquidity

Average Trading Volume: UMDD has an average daily trading volume of approximately 1 million shares. This indicates good liquidity, making it easy for investors to enter and exit positions.

Bid-Ask Spread: The bid-ask spread for UMDD is typically around 0.10%, which is considered tight and competitive.

Market Dynamics

Factors affecting UMDD's market environment include:

• Economic Indicators: The overall economic climate and specific sectors' performance can influence the MidCap 400 Index and, consequently, UMDD.
• Interest Rates: Changes in interest rates can impact the cost of borrowing for leveraged strategies, impacting UMDD's performance.
• Market Volatility: Periods of high market volatility can lead to increased volatility in UMDD's price.

Competitors

Key competitors include:

• Direxion Daily Mid Cap Bull 3X Shares (MIDU)
• VanEck Merk Mid-Cap Growth ETF (MGC)
• SPDR S&P MidCap 400 ETF (MDY)

Expense Ratio

UMDD has an expense ratio of 0.95%. This covers management fees and other operational costs.

Investment Approach and Strategy

Strategy: UMDD aims to track the daily performance of the MidCap 400 Index, but with double the exposure. It achieves this by using a leveraged swap agreement strategy.

Composition: UMDD invests primarily in swap agreements that track the MidCap 400 Index. This means it doesn't hold the underlying stocks directly but rather uses derivatives to achieve its exposure.

Key Points

• Leveraged ETF: Aims to deliver double the daily return of the MidCap 400 Index.
• High Risk/High Reward: Offers potential for magnified gains but also comes with increased volatility.
• Suitable for Aggressive Investors: Caters to investors seeking amplified exposure to mid-cap U.S. companies.
• Liquid and Established: Enjoys good trading volume and is backed by a reputable issuer.

Risks

• Volatility: UMDD is inherently more volatile than the underlying index due to its leveraged nature.
• Market Risk: The ETF's performance is directly tied to the MidCap 400 Index, which is subject to market fluctuations.
• Counterparty Risk: The ETF relies on swap agreements, which carry counterparty risk if the other party defaults.

Who Should Consider Investing

UMDD is suitable for investors who:

• Have a high risk tolerance and are comfortable with volatility.
• Seek aggressive exposure to the mid-cap U.S. market.
• Understand the risks associated with leveraged investment strategies.

Fundamental Rating Based on AI

Rating: 7/10

UMDD's fundamentals are considered strong. Its leveraged strategy offers potential for high returns, but it also comes with increased volatility. The ETF benefits from a reputable issuer, good liquidity, and a competitive expense ratio. However, investors should be aware of the risks associated with leveraged investing and the specific market dynamics affecting mid-cap stocks.

Justification:

• Strong Historical Performance: UMDD has outperformed the MidCap 400 Index in the past, indicating its potential for generating returns.
• Leveraged Strategy: The ability to magnify index returns can be attractive for aggressive investors.
• Reputable Issuer and Management: ProShares is a well-established ETF provider with a strong track record.
• Competitive Expense Ratio: The expense ratio is in line with other leveraged ETFs in the mid-cap segment.
• High Volatility: UMDD's leveraged nature leads to increased volatility, which may not be suitable for all investors.
• Market Risk: The ETF's performance is directly tied to the MidCap 400 Index, which is subject to market fluctuations.

Resources and Disclaimers

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

Resources:

• ProShares Ultra MidCap400 (UMDD): https://www.proshares.com/funds/UMDD
• MidCap 400 Index: https://us.spindices.com/indices/equity/sp-midcap-400
• ProShares: https://www.proshares.com/

Additional Notes:

• This analysis is based on data available as of November 2023.
• The AI rating is based on an analysis of various factors, including historical performance, volatility, fees, and market dynamics.
• The investment suitability of UMDD may vary depending on individual circumstances and risk tolerance.