ProShares UltraPro Short MidCap400 (SMDD)SMDD

US ETF ProShares UltraPro Short MidCap400:

Profile:

The ProShares UltraPro Short MidCap400 (SMID) is an exchange-traded fund (ETF) that seeks daily investment results, before fees and expenses, that correspond to three times the inverse (or opposite) of the daily performance of the S&P MidCap 400 Index. This means it aims to deliver three times the opposite daily return of the S&P MidCap 400, which tracks the performance of 400 mid-capitalization US stocks. It invests in swap agreements and other financial instruments to achieve its objective.

Objective:

The primary investment goal of SMID is to provide investors with short-term exposure to the opposite of the daily performance of the S&P MidCap 400 Index. This means that when the S&P MidCap 400 falls, SMID aims to gain value and vice versa. It is not intended for long-term investors.

Issuer:

ProShares is the issuer of SMID. It is a leading provider of exchange-traded funds (ETFs) with a well-established reputation and over $80 billion in assets under management.

Reputation and Reliability: ProShares is considered a highly reputable and reliable ETF provider with a solid track record. The company has received numerous awards and recognitions for its ETF products.

Management: ProShares’ management team has extensive experience and expertise in the financial industry. The team is led by industry veterans with a deep understanding of the ETF market.

Market Share: As of 2023, ProShares holds a significant market share in the leveraged and inverse ETF space, with SMID being one of its prominent offerings.

Total Net Assets: SMID manages over $830 million in total net assets.

Moat:

• Unique Strategy: SMID uses a leveraged and inverse strategy that is not commonly found in the market. This allows it to offer investors a unique opportunity to gain exposure to the opposite of the S&P MidCap 400 performance.
• Experienced Management: ProShares’ management team has a proven track record of success in the ETF industry.
• Strong Brand Recognition: ProShares is a well-known and respected ETF provider, which gives it a competitive advantage.

Financial Performance:

SMID has historically delivered high volatility in line with its leveraged and inverse strategy. Its performance is heavily dependent on the daily movement of the S&P MidCap 400 Index.

Benchmark Comparison: Compared to the S&P MidCap 400 Index, SMID tends to show amplified opposite returns. For example, if the index falls by 1%, SMID aims to gain 3%.

Growth Trajectory: The growth trajectory of SMID is dependent on the market sentiment and overall performance of the S&P MidCap 400 Index.

Liquidity:

• Average Trading Volume: SMID has a relatively high average trading volume, indicating good liquidity.
• Bid-Ask Spread: The bid-ask spread of SMID is relatively low, making it relatively cost-effective to trade.

Market Dynamics:

Factors affecting SMID's market environment include:

• Economic Indicators: Economic indicators like GDP growth, interest rates, and inflation can influence the S&P MidCap 400 Index performance, impacting SMID.
• Sector Growth Prospects: The outlook for the mid-cap sector can influence investors' sentiment towards SMID.
• Current Market Conditions: Bearish market conditions can potentially benefit SMID, while bullish markets can have a negative impact.

Competitors:

• Direxion Daily Mid Cap Bear 3X Shares (MIDZ)
• VelocityShares Daily Mid Cap Inverse 3X ETN (MIDD)

Expense Ratio:

The expense ratio of SMID is 0.95%, which is considered average for leveraged and inverse ETFs.

Investment approach and strategy:

• Strategy: SMID employs a leveraged and inverse strategy, aiming to achieve three times the opposite daily performance of the S&P MidCap 400 Index.
• Composition: SMID invests in financial instruments like swap agreements to achieve its objective. It does not directly hold stocks in the S&P MidCap 400 Index.

Key Points:

• Leveraged and inverse exposure to the S&P MidCap 400 Index
• Target for short-term investors
• High volatility
• Experienced management team
• Relatively high liquidity

Risks:

• Volatility Risk: SMID's leveraged and inverse strategy amplifies market movements, leading to high volatility and potential for significant losses.
• Market Risk: SMID's performance is closely tied to the S&P MidCap 400 Index, making it susceptible to risks associated with the mid-cap sector and the overall market.
• Counterparty Risk: SMID relies on swap agreements with counterparties, exposing it to the risk of these counterparties defaulting on their obligations.

Who Should Consider Investing:

• Short-term traders: Investors seeking short-term exposure to the opposite of the S&P MidCap 400 Index performance.
• Hedging Strategies: Investors looking to hedge their long positions in mid-cap stocks.
• Experienced investors: Investors who are comfortable with high volatility and understand the risks associated with leveraged and inverse investment strategies.

Fundamental Rating Based on AI:

7/10

SMID demonstrates several strengths, including its unique strategy, experienced management team, and relatively high liquidity. However, it also comes with high volatility and is not suitable for long-term investors. The AI-based rating considers these factors to arrive at an overall rating of 7 out of 10.

Resources and Disclaimers:

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

Resources:

• ProShares UltraPro Short MidCap400 (SMID): https://www.proshares.com/product/smid
• S&P MidCap 400 Index: https://www.spglobal.com/spdji/en/indices/equity/sp-midcap-400/