ProShares UltraPro Short Russell2000 (SRTY)

Overview

ProShares UltraPro Short Russell2000 (SRTY) seeks daily investment results, before fees and expenses, that correspond to three times the inverse (-3x) of the daily performance of the Russell 2000 Index. It is designed for sophisticated investors seeking to profit from a short-term decline in small-cap stocks.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs, with a generally good reputation for tracking its stated objectives, although performance can vary significantly from stated goals over longer periods.

Management Expertise

ProShares has extensive experience in managing leveraged and inverse ETFs, employing complex strategies to achieve the desired daily exposure.

Goal

To seek daily investment results, before fees and expenses, that correspond to three times the inverse (-3x) of the daily performance of the Russell 2000 Index.

Investment Approach and Strategy

Strategy: Inverse leveraged; aims for -3x the daily performance of the Russell 2000 Index.

Composition Primarily derivatives (swap agreements, futures contracts) designed to replicate the -3x daily return of the Russell 2000 Index.

Market Share: SRTY's market share is relatively small compared to broader ETFs tracking the Russell 2000 due to its niche focus and leveraged nature.

Total Net Assets (AUM): 237328311

Key Competitors

• ProShares Short Russell2000 (RWM)
• Direxion Daily Small Cap Bear 3X Shares (TZA)
• iShares Russell 2000 ETF (IWM)

Competitive Landscape

The competitive landscape consists of other inverse and leveraged ETFs targeting the Russell 2000 Index. SRTY's main advantage is its higher leverage (-3x), appealing to risk-tolerant traders. A disadvantage is the potential for greater losses and the effects of compounding, which can deviate significantly from the -3x target over longer periods. IWM is the largest benchmark in the space but is not an inverse product.

Historical Performance: Historical performance is highly volatile and dependent on the Russell 2000's daily movements. Due to the leverage and daily reset, long-term performance can deviate significantly from -3x the Russell 2000's cumulative return.

Benchmark Comparison: The benchmark is the inverse of the Russell 2000 Index multiplied by -3x on a daily basis. However, compounding effects prevent accurate correlation to the index over longer periods.

Expense Ratio: 0.95

Average Trading Volume

Average trading volume is relatively high, indicating good liquidity for those looking to trade this ETF.

Bid-Ask Spread

The bid-ask spread is typically reasonable, reflecting the ETF's active trading volume.

Market Environment Factors

Economic indicators, interest rate changes, and overall market sentiment influence the Russell 2000's performance, which directly affects SRTY. Risk aversion and expectations of economic slowdown tend to favor short positions.

Growth Trajectory

Growth depends on the bearish sentiment towards small-cap stocks. Changes in strategy are unlikely, as the ETF aims to maintain its -3x daily leverage.

Competitive Edge

SRTY's primary advantage is its high leverage (-3x) targeting the inverse performance of the Russell 2000, appealing to sophisticated traders seeking short-term profit from anticipated declines in small-cap stocks. The fund provides exposure to the inverse of the index without directly shorting individual stocks. Its active management adjusts derivative positions daily to maintain the desired leverage. ProShares' experience in leveraged and inverse ETFs provides further credibility.

Volatility

SRTY exhibits extremely high volatility due to its leveraged nature. Small movements in the Russell 2000 can result in significant gains or losses.

Market Risk

Market risk is substantial, as the ETF is directly tied to the performance of the Russell 2000. Unexpected positive performance in small-cap stocks can lead to significant losses. Compounding effects can also erode value over time, even if the Russell 2000 shows no net gain.

Ideal Investor Profile

Sophisticated traders and investors with a high-risk tolerance who understand the complexities of leveraged and inverse ETFs and who are looking for short-term tactical opportunities.

Market Risk

Not suitable for long-term investors. Best suited for active traders who seek to profit from short-term declines in the Russell 2000 Index.

ProShares UltraPro Short Russell2000 (SRTY) is a leveraged inverse ETF designed for short-term tactical trading, providing -3x daily exposure to the Russell 2000 Index. It is not suitable for long-term investors due to the compounding effects and high volatility associated with leveraged instruments. The ideal investor is a sophisticated trader with high-risk tolerance, seeking to profit from anticipated short-term declines in small-cap stocks. Due to these risk factors, SRTY carries a higher risk for potential investors.

Data Sources:

• ProShares Official Website
• ETF.com
• Yahoo Finance

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered financial advice. Investment decisions should be made after consulting with a qualified financial advisor. Performance data is historical and does not guarantee future results. Leveraged and inverse ETFs are complex instruments and involve a high degree of risk.