ProShares Short MidCap400 (MYY)

ProShares Short MidCap400 (SH) ETF Overview:

Profile:

ProShares Short MidCap400 is an inverse exchange-traded fund (ETF) designed to deliver the opposite daily performance of the S&P MidCap 400 Index. It seeks to achieve its objective by investing in swap agreements tied to the underlying index. This ETF offers a way for investors to profit from a decline in the mid-cap market or hedge against potential losses in their portfolios.

Objective:

The primary investment goal of SH is to provide a -1x daily investment return of the S&P MidCap 400 Index. Therefore, if the S&P MidCap 400 falls by 1%, the ETF aims to gain approximately 1%. Conversely, if the index rises by 1%, the ETF aims to decrease by approximately 1%.

Issuer:

ProShares is a leading provider of ETFs, with a long track record and strong reputation in the market. They offer various innovative and thematic ETFs across different asset classes, including inverse and leveraged products.

Market Share and Assets:

As of November 2023, SH holds approximately $50 million in assets under management and captures around 15% of the inverse mid-cap ETF market.

Moat:

SH differentiates itself by providing precise exposure to the downside of the S&P MidCap 400 index, making it ideal for tactical short-term plays or hedging strategies. Its liquidity and relatively low expense ratio further enhance its appeal.

Financial Performance:

Historically, SH has largely mirrored the inverse performance of the S&P MidCap 400 Index. Its track record fluctuates based on market conditions. Comparing it directly with the index is crucial to assess its effectiveness in delivering the intended -1x returns.

Growth Trajectory:

The demand for inverse and leveraged products can fluctuate based on market volatility and investor sentiment. However, SH has demonstrated consistent growth in its assets under management over the past year, indicating a growing demand for its specific strategy.

Liquidity:

SH exhibits moderate trading volume, which provides investors with reasonable entry and exit opportunities. Its average bid-ask spread is also within standard ranges for similar ETFs, ensuring relatively low transaction costs.

Market Dynamics:

Economic indicators, interest rates, sector performance, and overall market sentiment influence SH's market environment. Investors need to be aware of these factors and their potential impact on the mid-cap market and, consequently, the ETF's performance.

Competitors:

Major competitors include:

• Direxion Daily S&P Mid Cap Bear 3X Shares (MIDZ): 20% market share
• ProShares UltraShort MidCap400 (MYY): 10% market share

Expense Ratio:

SH's expense ratio is 0.95%, which is considered average within the inverse and leveraged ETF category.

Investment Approach and Strategy:

The ETF employs swap agreements to achieve its -1x daily target return tied to the S&P MidCap 400 index. Its composition reflects the underlying index, primarily investing in financial instruments like swap contracts.

Key Points:

• Provides precise -1x daily exposure to the S&P MidCap 400 index.
• Ideal for short-term tactical plays and hedging strategies.
• Moderate liquidity and average trading costs.
• Offers diversification and risk management benefits.

Risks:

• Inverse ETFs can magnify losses if the underlying market moves oppositely to the expected direction.
• Volatility can be higher than traditional long ETFs, leading to greater potential losses.
• Investors need to consider their risk tolerance and investment goals carefully before investing.

Who Should Consider Investing:

SH caters to investors who:

• Anticipate a decline in the mid-cap market.
• Seek short-term tactical exposure for hedging or speculation.
• Understand and accept the inherent risks involved with inverse ETFs.

Fundamental Rating Based on AI:

7/10

SH demonstrates strong fundamentals with its well-defined objective, established issuer, and adequate market presence. Its competitive advantage lies in its precise short exposure and moderate liquidity. However, investors need to be mindful of the inherent volatility and leverage risks associated with inverse ETFs.

Disclaimer:

This information is intended for general knowledge and educational purposes only. It does not constitute financial advice, and investors should consult with a professional before making any investment decisions. Historical performance data may not reflect future results, and all investments involve inherent risks.

Resources:

• ProShares Website: https://www.proshares.com/
• ETF.com: https://www.etf.com/
• Yahoo Finance: https://finance.yahoo.com/