ProShares Short Russell2000 (RWM)

Overview

The ProShares Short Russell2000 (RWM) seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the Russell 2000 Index. It provides a way to profit from, or hedge exposure to, a decline in small-cap U.S. stocks as represented by the Russell 2000.

Reputation and Reliability

ProShares is a well-known issuer specializing in leveraged and inverse ETFs, with a track record of providing various investment strategies.

Management Expertise

ProShares has a dedicated team with experience in managing complex ETF strategies, including inverse and leveraged products.

Goal

To seek daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the Russell 2000 Index.

Investment Approach and Strategy

Strategy: The ETF employs a strategy of using financial instruments such as swap agreements and futures contracts to achieve its inverse objective.

Composition The ETF primarily holds derivatives designed to provide inverse exposure to the Russell 2000 Index, rather than directly holding stocks.

Market Share: RWM's market share fluctuates based on investor demand for inverse small-cap exposure and trading volume.

Total Net Assets (AUM): 506321180

Key Competitors

• Direxion Daily Small Cap Bear 3X Shares (TZA)
• ProShares UltraShort Russell2000 (TWM)
• AdvisorShares Ranger Equity Bear ETF (HDGE)

Competitive Landscape

The competitive landscape includes other inverse and leveraged ETFs targeting the Russell 2000. RWM has a competitive advantage due to its relatively simple inverse strategy and higher AUM. Competitors like TZA offer 3x leverage, attracting investors seeking higher potential returns (and risks). However, RWM offers a more straightforward -1x exposure, appealing to those looking for a direct hedge or inverse play on the Russell 2000 without the amplified volatility of leveraged products.

Historical Performance: Historical performance reflects the inverse of the Russell 2000's daily returns. Performance is highly dependent on the Russell 2000's movement.

Benchmark Comparison: The ETF's performance should ideally track the inverse of the Russell 2000. Any deviations are due to fees, expenses, and tracking errors.

Expense Ratio: 0.95

Average Trading Volume

The average daily trading volume for RWM is generally high, indicating good liquidity.

Bid-Ask Spread

The bid-ask spread is typically tight, which can vary with market conditions and trading activity.

Market Environment Factors

Economic uncertainty, interest rate changes, and overall market sentiment significantly impact RWM's performance. Negative outlooks for small-cap companies typically drive demand for this ETF.

Growth Trajectory

RWM's growth is correlated to economic cycles, market volatility, and investor sentiment regarding small-cap stocks. There are no planned or announced changes to holdings or strategy.

Competitive Edge

RWM's competitive edge lies in its first-mover advantage and brand recognition within the -1x short Russell 2000 ETF space. It benefits from higher trading volumes compared to some competitors, which leads to better price discovery and tighter bid-ask spreads. It offers a simpler, more direct inverse exposure than leveraged products. This simplicity makes it attractive to investors seeking a straightforward hedge or short position on small-cap equities without the increased risk of leverage.

Volatility

RWM is inherently volatile due to its inverse relationship with the Russell 2000.

Market Risk

The ETF is exposed to market risk, particularly related to declines in the Russell 2000 Index. Inverse ETFs may not perfectly track the inverse of the index's long-term performance due to daily rebalancing.

Ideal Investor Profile

RWM is suitable for sophisticated investors who understand inverse ETFs and are looking to hedge their portfolios against declines in the small-cap market or to profit from a short-term negative outlook.

Market Risk

RWM is best suited for active traders or those implementing short-term hedging strategies rather than long-term investors due to the effects of compounding and daily rebalancing.

ProShares Short Russell2000 is an inverse ETF designed to deliver the inverse of the daily performance of the Russell 2000. It serves as a tool for hedging or speculating on small-cap market declines. Investors should understand the risks associated with inverse ETFs, especially the effects of compounding over longer periods. Itu2019s suitable for sophisticated investors with a short-term outlook and knowledge of inverse products. Its financial performance will be inversely correlated with the Russell 2000 index.

Data Sources:

• ProShares Website
• Yahoo Finance
• ETF.com

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. ETF performance can vary, and past performance is not indicative of future results. Consult with a financial advisor before making any investment decisions.