ProShares UltraShort Consumer Goods (SZK)

ProShares UltraShort Consumer Goods (SZK) Overview

Profile

ProShares UltraShort Consumer Goods (SZK) is an exchange-traded fund (ETF) that seeks daily investment results, before fees and expenses, that correspond to twice the inverse (or negative) of the daily performance of the Dow Jones U.S. Consumer Goods Index. In simpler terms, SZK aims to deliver returns that are opposite to the performance of the consumer goods sector, magnified by a factor of two.

The ETF invests in short-term swap agreements based on the index, which means it uses derivatives to achieve its investment objective. This makes SZK a leveraged and inverse product, suitable for experienced investors with a high-risk tolerance.

Objective

The primary investment goal of SZK is to provide short-term, inverse exposure to the performance of the U.S. consumer goods sector. This means that if the sector goes down, SZK aims to deliver double the percentage gain, and vice versa.

Issuer

ProShares is the issuer of SZK. Established in 2006, ProShares is a leading provider of innovative and thematic ETFs, with over $80 billion in assets under management.

Reputation and Reliability: ProShares has a strong reputation in the ETF industry, known for its unique and well-designed products. The firm has received numerous awards and accolades for its innovative ETF offerings.

Management: ProShares has a team of experienced professionals with extensive backgrounds in finance and investment management. The team is responsible for managing and overseeing the firm's ETF portfolio.

Market Share & Total Net Assets

SZK holds a relatively small market share within the inverse and leveraged ETF category. As of November 14, 2023:

• Market Share: Approximately 0.5%
• Total Net Assets: Around $12 million

Moat

The competitive advantage of SZK lies in its unique exposure to the short-term, inverse performance of the consumer goods sector. This allows investors to capitalize on potential downward trends in the sector with double the leverage.

Financial Performance

Analyzing historical financial performance data for SZK is crucial to understand its track record. Comparing its performance to its benchmark index, the Dow Jones U.S. Consumer Goods Index, is also essential to assess its effectiveness.

Growth Trajectory:

SZK's growth trajectory is directly tied to the performance of the consumer goods sector. If the sector experiences declines, SZK's potential for growth increases. However, this also carries the risk of significant losses if the sector rebounds.

Liquidity

Average Trading Volume: SZK has a moderate average trading volume, indicating decent liquidity.

Bid-Ask Spread: The bid-ask spread is relatively tight, suggesting low trading costs.

Market Dynamics

Factors affecting SZK's market environment include:

• Economic indicators: Consumer confidence, inflation, interest rates, and economic growth
• Sector growth prospects: Future trends in consumer spending and demand for consumer goods
• Current market conditions: Volatility, investor sentiment, and geopolitical events

Competitors

Key competitors in the inverse and leveraged ETF category include:

• ProShares UltraShort Consumer Services (SCC)
• Direxion Daily Consumer Staples Bear 2X Shares (CWB)
• ProShares UltraPro Short Consumer Discretionary (SDD)

Expense Ratio

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

Investment Approach and Strategy

Strategy: SZK aims to achieve its objective by using short-term swap agreements based on the Dow Jones U.S. Consumer Goods Index. This means it enters into contracts to sell the index at a predetermined price in the future, hoping to buy it back later at a lower price for a profit.

Composition: SZK primarily holds swap agreements linked to the index, along with other derivative instruments to achieve its investment objective.

Key Points

• SZK offers short-term, inverse exposure to the consumer goods sector.
• It is a leveraged and inverse product, suitable for experienced investors.
• The issuer, ProShares, has a strong reputation and track record.
• SZK's performance is directly tied to the consumer goods sector's performance.
• Liquidity is moderate, and the expense ratio is 0.95%.

Risks

• Volatility: SZK's value can fluctuate significantly due to its leverage and short-term focus.
• Market Risk: The ETF is exposed to the risks associated with the consumer goods sector, including economic downturns and changes in consumer preferences.
• Counterparty Risk: SZK relies on swap agreements with counterparties, which carry the risk of default.

Who Should Consider Investing

SZK is suitable for investors with a high-risk tolerance who are looking for short-term, inverse exposure to the consumer goods sector. It is not appropriate for long-term investors or those with a low-risk appetite.

Fundamental Rating Based on AI

Rating: 7/10

Justification: SZK offers a unique and potentially lucrative investment opportunity for experienced investors. However, its high volatility and significant risks require careful consideration. Analyzing the ETF's performance over time and comparing it to its benchmark is crucial to assess its effectiveness.

Resources and Disclaimers

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