ProShares UltraPro MidCap400 (UMDD)

ETF ProShares UltraPro MidCap400 Summary:

Profile:

ProShares UltraPro MidCap400 (MIDU) is an exchange-traded fund (ETF) that seeks daily investment results, before fees and expenses, that match twice (200%) the daily performance of the S&P MidCap 400 Index. This means it aims to deliver double the daily return of the MidCap 400, regardless of whether the market goes up or down.

MIDU uses swaps and other financial instruments to achieve its 2x leverage objective. It primarily invests in U.S. mid-capitalization stocks, focusing on companies with market capitalizations between $2 billion and $10 billion.

Objective:

The primary investment goal of MIDU is to provide investors with leveraged exposure to the performance of the S&P MidCap 400 Index. This ETF is designed for short-term traders looking to amplify their returns on the MidCap 400 Index.

Issuer:

ProShares is the issuer of MIDU.

• Reputation and Reliability: ProShares is a well-established and reputable ETF issuer with over $80 billion in assets under management. They have a strong track record of offering innovative and thematic ETFs.
• Management: ProShares has a team of experienced investment professionals who manage and oversee their ETFs.

Market Share:

MIDU has a relatively small market share within the leveraged mid-cap ETF space. However, it is one of the most actively traded leveraged mid-cap ETFs.

Total Net Assets:

As of October 26, 2023, MIDU has approximately $770 million in total net assets.

Moat:

The main competitive advantage of MIDU is its leverage factor of 2x. This allows investors to potentially amplify their returns compared to other mid-cap ETFs that track the S&P MidCap 400 Index without leverage.

Financial Performance:

MIDU has a volatile performance history, reflecting its leveraged nature. Its returns have significantly outperformed the S&P MidCap 400 Index during strong market upturns but have also experienced amplified losses during downturns.

Growth Trajectory:

The growth trajectory of MIDU is highly dependent on the performance of the S&P MidCap 400 Index and market volatility. Historically, leveraged ETFs tend to underperform their underlying indices over the long term due to the compounding effect of daily rebalancing.

Liquidity:

MIDU has a relatively high average trading volume, making it a fairly liquid ETF. This means investors can typically buy and sell shares without significantly impacting the price.

Market Dynamics:

The market dynamics affecting MIDU include the overall performance of the U.S. mid-cap market, interest rate changes, and investor sentiment towards leveraged investment products.

Competitors:

• Direxion Daily S&P MidCap 400 Bull 2X Shares (MDY)
• VelocityShares Daily MidCap 400 2x VIX Short (MIDZ)
• MicroSectors Mid Cap 400 3x Long (MCV)

Expense Ratio:

MIDU has an expense ratio of 0.95%.

Investment Approach and Strategy:

MIDU uses a replication approach, meaning it seeks to track the daily performance of the S&P MidCap 400 Index by investing in a portfolio of mid-cap stocks that are similar to those included in the index. It achieves its 2x leverage through the use of swaps and other financial instruments.

Key Points:

• Leverages the S&P MidCap 400 Index with a 2x factor.
• Aims to deliver amplified returns compared to the S&P MidCap 400 Index.
• High volatility and risk profile.
• Short-term trading instrument.
• Relatively high liquidity.

Risks:

• Volatility: MIDU is a leveraged ETF, meaning its daily price movements are amplified compared to the underlying index. This can lead to significant losses during market downturns.
• Market Risk: MIDU's performance is tied to the performance of the S&P MidCap 400 Index. A decline in the mid-cap market could result in significant losses for MIDU.
• Tracking Error: MIDU aims to track the S&P MidCap 400 Index, but there may be tracking errors due to fees and expenses.
• Counterparty Risk: MIDU uses swaps and other financial instruments to achieve its leverage. There is a risk that the counterparties to these instruments may default on their obligations.

Who Should Consider Investing:

MIDU is suitable for experienced investors who are comfortable with high-risk, short-term trading strategies. It is not appropriate for long-term investors or those with a low-risk tolerance.

Fundamental Rating Based on AI:

Based on an AI-based analysis of the factors mentioned above, MIDU receives a rating of 6 out of 10. The AI considers the ETF's high volatility, leverage risk, and potential for tracking errors as negatives. However, it also acknowledges the ETF's potential for amplified returns and its relatively low expense ratio as positives.

Resources and Disclaimers:

• ProShares website: https://www.proshares.com/
• S&P MidCap 400 Index: https://us.spindices.com/indices/equity/sp-midcap-400
• Morningstar: https://www.morningstar.com/etfs/arcx/midu/quote.html

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