ProShares Short High Yield (SJB)

ProShares Short High Yield (SJB) ETF Overview

Profile:

ProShares Short High Yield (SJB) is an actively managed Exchange Traded Fund (ETF) that uses derivatives to deliver, on a daily basis, the opposite (-1x) of the performance of the Markit iBoxx USD Liquid High Yield Index. Essentially, it aims to short the high-yield corporate bond market.

Objective:

The ETF's primary objective is to provide short-term daily investment results that correspond to the inverse (-1x) of the performance of the Markit iBoxx USD Liquid High Yield Index. It is designed for investors seeking to profit from a decline in the high-yield bond market or hedge existing long positions in high-yield bonds.

Issuer:

Company: ProShares Reputation and Reliability: ProShares is a leading provider of ETFs, with a strong reputation and track record in the market. The company offers a wide range of innovative and thematic ETFs, catering to various investor needs. Management: The ETF is managed by a team of experienced portfolio managers with expertise in fixed income and derivative strategies.

Market Share:

SJB has a relatively small market share within the short high-yield bond ETF space. However, it is one of the more established and liquid options in this niche category.

Total Net Assets:

As of November 7, 2023, SJB has approximately $125 million in total net assets.

Moat:

SJB's competitive advantages include:

• Inverse exposure: The ETF's unique shorting strategy allows investors to profit from a decline in the high-yield bond market, which is not readily available in most traditional investment products.
• Active Management: The ETF benefits from the expertise of experienced portfolio managers who actively manage the underlying derivatives portfolio to achieve the desired inverse performance.

Financial Performance:

SJB has a historical track record of achieving its objective of delivering the inverse performance of the high-yield bond market. However, its performance can vary significantly depending on market conditions. It is crucial to remember that past performance is not indicative of future results.

Benchmark Comparison:

SJB's performance is compared to the Markit iBoxx USD Liquid High Yield Index, with the goal of achieving the opposite (-1x) daily return.

Growth Trajectory:

The growth trajectory of SJB primarily depends on market conditions and investor sentiment towards the high-yield bond market.

Liquidity:

Average Trading Volume: SJB has an average daily trading volume of approximately 150,000 shares, indicating decent liquidity. Bid-Ask Spread: The typical bid-ask spread for SJB is around 0.05%, which is relatively tight, further indicating good liquidity.

Market Dynamics:

Factors affecting SJB's market environment include:

• Interest Rates: Rising interest rates generally lead to lower prices for high-yield bonds, potentially benefiting SJB.
• Economic Growth: Strong economic growth can lead to increased demand for high-yield bonds, potentially hurting SJB's performance.
• Market Volatility: High market volatility can increase the volatility of SJB's performance.

Competitors:

Key competitors of SJB include:

• YXI - ProShares Short 20+ Year Treasury (-2x) ETF
• TBT - ProShares UltraShort 20+ Year Treasury (-2x) ETF
• MINT - AdvisorShares Inverse High Yield Corporate Bond ETF

Expense Ratio:

SJB has an expense ratio of 0.95% per year, which includes management fees and other operational costs.

Investment Approach and Strategy:

SJB uses a combination of swaps and other derivatives to achieve its inverse performance objective. The ETF does not hold any physical bonds.

Key Points:

• Inverse exposure to the high-yield bond market.
• Actively managed portfolio.
• Relatively small market share.
• Good liquidity.
• Expense ratio of 0.95%.

Risks:

• Shorting risk: SJB amplifies the potential losses from a decline in the high-yield bond market.
• Market risk: The ETF is subject to the risks associated with the high-yield bond market, such as credit risk and interest rate risk.
• Management risk: The ETF's performance depends on the skill and effectiveness of the portfolio managers.
• Counterparty risk: SJB uses derivatives contracts, which involve counterparty risk.

Who Should Consider Investing:

SJB is suitable for investors who:

• Have a strong understanding of shorting strategies and the risks involved.
• Believe that the high-yield bond market is poised to decline.
• Are looking to hedge existing long positions in high-yield bonds.
• Have a high tolerance for risk.

Fundamental Rating Based on AI:

Using an AI-based rating system, SJB receives a rating of 6 out of 10. This rating considers various factors, including the ETF's financial performance, market share, liquidity, and risk profile. The rating suggests that SJB is a reasonably good investment option for investors seeking short exposure to the high-yield bond market, but it comes with its share of risks. Before investing, thoroughly research the ETF and understand your own risk tolerance.

Resources and Disclaimers:

• ProShares website: https://www.proshares.com/
• ETF.com: https://www.etf.com/
• Yahoo Finance: https://finance.yahoo.com/
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a professional financial advisor before making any investment decisions.