ProShares Ultra 7-10 Year Treasury (UST)

US ETF ProShares Ultra 7-10 Year Treasury (UST) Overview

Profile:

ProShares Ultra 7-10 Year Treasury (UST) is an exchange-traded fund (ETF) that seeks daily investment results, before fees and expenses, that correspond to twice (200%) the performance of the Bloomberg U.S. Treasury 7-10 Year Bond Index. It invests in U.S. Treasury bonds with maturities between 7 and 10 years. This ETF uses swaps and other derivative instruments to achieve its objective.

Objective:

This ETF's objective is to magnify the daily returns of the underlying 7-10 Year Treasury Bond Index. It is designed for investors who seek leveraged exposure to the 7-10 year U.S. Treasury bond market.

Issuer:

ProShares is the issuer of UST. It is a leading provider of exchange-traded funds, offering various products for diverse investment strategies.

• Reputation and Reliability: ProShares has established itself as a reputable issuer with a solid track record in the ETF industry. It boasts an excellent reputation for transparency and innovation.

• Management: The ETF is managed by ProShares’ experienced investment team with a deep understanding of the fixed-income market.

Market Share:

UST has a market share of approximately 0.03% within its sector, which comprises other leveraged Treasury bond ETFs.

Total Net Assets:

UST currently holds $130.52 million in assets under management.

Moat:

• Leveraged Exposure: UST offers investors amplified returns compared to traditional Treasury investments. This leverage can magnify gains in favorable market conditions.

• Focus: The ETF's specific 7-10-year Treasury exposure differentiates it from broader Treasury ETFs and caters to investors with a targeted view.

Financial Performance:

• Historical Performance: UST has faced fluctuations in performance similar to its underlying index. It experienced strong gains in the low-interest-rate environment of 2020 but saw a downturn in 2022 as interest rates rose.

• Benchmark Comparison: The ETF outperformed the Bloomberg U.S. Treasury 7-10 Year Bond Index in 2022 but underperformed in prior years. This emphasizes its amplified volatility compared to the underlying market.

Growth Trajectory:

Growth prospects of UST hinge heavily on future interest rate movements. A potential fall in interest rates could stimulate price appreciation for the ETF. However, further rate hikes may negatively impact performance.

Liquidity:

• Average Trading Volume: UST boasts a healthy average daily trading volume of approximately 217,296 shares, indicating good liquidity for investors to enter and exit positions efficiently.

• Bid-Ask Spread: The ETF has a relatively narrow bid-ask spread, suggesting low transaction costs for investors.

Market Dynamics:

• Economic Indicators: Interest rate movements, inflation levels, and overall economic growth heavily impact the Treasury market and consequently UST's performance.

• Market Conditions: Investor risk appetite and prevailing market sentiment can influence bond market dynamics.

Competitors:

The primary competitors of UST include:

• TYD - ProShares Ultra 20+ Year Treasury (0.04% market share)
• TMF - Direxion Daily 7-10 Year Treasury Bull 2X Shares (0.03% market share)
• UBT - ProShares Ultra 7-10 Year Treasury (0.02% market share)

Expense Ratio:

UST comes with an expense ratio of 0.95%, covering the fund's operating and management costs.

Investment Approach and Strategy:

• Strategy: UST uses financial instruments like swaps to track double (200%) the daily return of the Bloomberg U.S. Treasury 7-10 Year Bond Index. It seeks short-term gains from price movements within this specific Treasury segment.

• Composition: The ETF primarily holds swaps that offer leveraged exposure to U.S. Treasury bonds maturing in 7-10 years.

Key Points:

• Leveraged exposure to the 7-10-year Treasury market.

• Potentially higher returns but also amplified risks.

• Suitable for short-term investment horizons.

Risks:

• High volatility: Leveraging magnifies market swings, leading to potentially significant losses if Treasury prices decline.

• Interest rate risk: Rising rates negatively impact UST's value as Treasury prices fall.

• Market risk: General economic and financial market conditions influence Treasury market performance and, thus, UST.

Who Should Consider Investing:

UST might appeal to investors with:

• Short-term investment objectives.

• High risk tolerance.

• A bullish view on the 7-10-year Treasury market.

Fundamental Rating Based on AI: 6/10

Justification:

UST receives a moderate score due to its unique leveraged approach. However, its high volatility and dependence on market direction warrant caution. The ETF might offer attractive gains in certain market environments but carries inherent risks for long-term investors.

This rating considers various factors, including financial strength, market positioning, potential growth, risks involved, and historical track record. The evaluation uses an AI-based model that analyzes these data points and determines an objective score for the ETF.

Resources and Disclaimer:

This summary is derived from data gathered on September 28, 2023, from sources including:

• ProShares Website: https://www.proshares.com/funds/UST

• Morningstar: https://www.morningstar.com/etfs/arcx/ust/performance

• Bloomberg: https://www.bloomberg.com/quote/T1:US

This information should not substitute for personalized financial advice. It is recommended to consult with a professional financial advisor to understand the suitability and risks involved in this or any investment before making decisions.