ProShares UltraPro Short MidCap400 (SMDD)

Overview

ProShares UltraPro Short MidCap400 (SMDD) seeks daily investment results, before fees and expenses, that correspond to three times the inverse (-3x) of the daily performance of the S&P MidCap 400 Index. It offers leveraged inverse exposure to mid-cap U.S. equities.

Reputation and Reliability

ProShares is a well-established issuer known for its leveraged and inverse ETFs. It has a solid track record but these products are considered high risk.

Management Expertise

ProShares has a team experienced in managing leveraged and inverse ETFs, requiring a deep understanding of derivatives and market dynamics.

Goal

To deliver three times the inverse (-3x) of the daily performance of the S&P MidCap 400 Index.

Investment Approach and Strategy

Strategy: Uses derivatives, primarily swaps, to achieve its leveraged inverse exposure. Intended for short-term trading, not long-term investing.

Composition Primarily holds financial instruments like swap agreements and futures contracts designed to replicate the inverse leveraged performance of the S&P MidCap 400 Index.

Market Share: SMDD has a niche market share within the leveraged and inverse mid-cap ETF space.

Total Net Assets (AUM): 89200000

Key Competitors

• ProShares Short MidCap400 (SHK)
• Direxion Daily Mid Cap Bear 3X Shares (MIDZ)

Competitive Landscape

The competitive landscape consists of other leveraged and inverse ETFs targeting the same or similar indices. SMDD's advantage is its higher leverage, but this also increases risk. Competitors may offer different levels of leverage or lower expense ratios, catering to different risk appetites.

Historical Performance: Historical performance will be highly volatile and dependent on the S&P MidCap 400 Index's performance. Due to the leveraged and inverse nature, it's not a buy-and-hold investment.

Benchmark Comparison: The ETF should theoretically perform inversely to the S&P MidCap 400 Index, magnified by a factor of -3. Tracking error can occur due to fees, expenses, and the daily reset.

Expense Ratio: 0.95

Average Trading Volume

SMDD has adequate liquidity with a reasonably high average trading volume, making it relatively easy to enter and exit positions quickly.

Bid-Ask Spread

The bid-ask spread is typically moderate but can widen during periods of high volatility, impacting trading costs.

Market Environment Factors

Economic conditions, interest rate changes, and overall market sentiment significantly affect SMDD's performance. It tends to perform well during periods of market downturn or anticipated decline in mid-cap stocks.

Growth Trajectory

SMDD's growth is linked to investor demand for short-term hedging or speculative tools during market volatility. There have been no major strategic changes to holdings.

Competitive Edge

SMDD's main advantage is its high leverage (-3x), appealing to traders seeking amplified inverse returns. ProShares' reputation and marketing efforts also contribute. However, the high expense ratio and potential tracking error diminish its edge. It caters to a specific niche of sophisticated investors understanding leverage and inverse products.

Volatility

SMDD is highly volatile due to its leveraged and inverse nature. It is designed for short-term trading, not long-term investment.

Market Risk

The primary risk is the potential for significant losses if the S&P MidCap 400 Index rises, magnified by the leverage factor. Compounding effects can erode value over time if held for extended periods.

Ideal Investor Profile

Experienced traders with a high-risk tolerance who understand leveraged and inverse ETFs and have a short-term trading horizon.

Market Risk

Best suited for active traders seeking short-term tactical positions to profit from anticipated declines in the mid-cap market. Not suitable for long-term investors or passive index followers.

ProShares UltraPro Short MidCap400 is a leveraged inverse ETF designed for short-term tactical trading, providing -3x daily exposure to the S&P MidCap 400 Index. It's a high-risk, high-reward instrument best suited for sophisticated traders knowledgeable about leveraged products. Due to its daily reset and compounding effects, it's not recommended for long-term investment. Market volatility and short-term market sentiment are crucial drivers of its performance.

Data Sources:

• ProShares website
• SEC filings
• FactSet

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investing in leveraged and inverse ETFs involves significant risk of loss.