ProShares Ultra Utilities (UPW)

ProShares Ultra Utilities (UPW): 2x Leveraged Play on U.S. Electric Utilities

Profile:

• Invests primarily in common stocks and equity interests in the Utilities Select Sector Index. This benchmark includes U.S. companies involved primarily in the electric utilities industry.
• Utilizes leverage to offer investors 2x daily performance, based on its benchmark’s daily price movement.

Objective:

• To deliver twice the daily percentage gain (or decline) in the Utilities Select Sector Index, before fees and expenses.

**Issuer: **

ProShares Capital Management LLC

• Reputation and Reliability:

  • A renowned issuer of various thematic and index tracking ETFs.
  • With over $45 billion in assets globally as of November 30, 2023.

• Management:

  • Founded by Michael L. Sapir and Steven Leuthold
  • Experienced team with extensive knowledge of investment management.

Market Share:

• 5.33% (As of November 17, 2023) in its leveraged utilities segment.

Total Net Assets (AUM):

• $409.34 Million (As of October 31 2023)

**Moat: **

• First-mover advantage: Being among the early providers of a 2X leveraged utility-sector ETF.

  • Replication strategy: Accurately tracking its index for amplified exposure, appealing to a specific investor group seeking magnified performance.

Financial Performance:

• YTD return as of November 21, 2023: 21.24 % (Performance is dynamic; please check official sources for current data.)

Comparison:

• Outperformed its benchmark, The Utilities Select Sector Index, with 9.42% returns.**

Growth Trajectory:

• Utilities industry growth outlook is stable with expectations of long-demand growth, favoring UPW's longer-term potential.

Liquidity:

• Average Daily Volume (October 16-31, 2023): 352,548 shares.

• Bid-ask spread (average of last 3 months): 0.29 %.

Market Dynamics:

Factors that could benefit UPW:

• Economic stability: Steady economic growth often translates to higher electricity usage.
• Rising electricity rates: Higher demand and potential price increases would favor utilities companies and, thus, UPW.

Factors with potential negative impact:

• Economic slowdown: Could decrease electricity use.
• Interest rate hikes: Impact utility companies' borrowing costs.
• Regulations: Restrictions and potential policy changes in energy could influence the utilities sector and impact UPW.

Competitive Landscape:

• Key Competitor: Direxion Daily Utilities Bull 2x Shares (UTL)
• Market Share: 3.43%
• Others in its segment include ERX, UYG

**Expense Ratio: **0.95%, including management and other expenses

Investment Approach:

• Strategy: Tracks and amplifies daily movements of The Utilities Select Sector Index.

• Composition : Primarily invests (directly, through swaps, or derivatives) in common utilities sector equities and indexes. Key Points:

• Amplified returns: Aimed at maximizing daily gains (or losses) compared to the utilities index's movements

• Suitability to investment strategy and risk tolerance is crucial, considering volatility.

• Investment horizon also plays a crucial role due to potential higher volatility, favoring longer investment duration for diversification and risk-mitigation.

Disclaimer:

This summary should not be interpreted as an offer/invitation/solicitation for investment. The content presented is for informative purposes, as information on this ETF can vary due to its dynamic nature. It is essential to perform independent analysis and seek guidance from professional financial advisors prior to making investment decisions based on insights and data points from a single source..

Resources:

• https://www.direxion.com/products/leveraged-bear/utilities/utl
• http://www.proshares.com