ProShares Ultra Russell2000 (UWM)

Overview

The ProShares Ultra Russell2000 (UWM) is a leveraged ETF designed to provide twice (2x) the daily performance of the Russell 2000 Index, which represents small-cap U.S. companies. It's targeted towards investors seeking amplified short-term gains in the small-cap market. The fund uses financial derivatives to achieve its leverage target.

Reputation and Reliability

ProShares is a well-established issuer known for its leveraged and inverse ETFs. They have a history of providing a wide range of specialized investment products.

Management Expertise

ProShares has a dedicated team managing leveraged and inverse ETFs, with expertise in derivatives and portfolio construction to meet the fund's daily leverage target.

Goal

To seek daily investment results, before fees and expenses, that correspond to twice (2x) the daily performance of the Russell 2000 Index.

Investment Approach and Strategy

Strategy: The ETF employs a leveraged strategy, primarily using financial instruments such as swap agreements and futures contracts to achieve its 2x exposure to the Russell 2000 Index.

Composition The ETF holds a combination of financial derivatives and cash to achieve its leveraged exposure. The underlying holdings are designed to replicate twice the daily changes in the Russell 2000 Index.

Market Share: UWM's market share of the leveraged small-cap ETF market varies and is significantly smaller than non-leveraged small cap ETFs.

Total Net Assets (AUM): 699430573.75

Key Competitors

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

Competitive Landscape

The leveraged small-cap ETF market is relatively concentrated. UWM faces competition from other leveraged ETFs like TNA. Advantages of UWM include ProShares' reputation. Disadvantages include the inherent risks and complexities of leveraged products compared to non-leveraged IWM.

Historical Performance: Historical performance varies greatly depending on market conditions. Due to the leveraged nature, the ETF experiences significant volatility and may not accurately reflect 2x the cumulative performance of the Russell 2000 over longer periods.

Benchmark Comparison: The ETF aims to provide 2x the *daily* performance of the Russell 2000, not long term. Due to compounding effects, returns will likely diverge significantly over longer periods.

Expense Ratio: 0.95

Average Trading Volume

UWM exhibits a reasonably healthy average trading volume, which can vary based on market interest and investor activity.

Bid-Ask Spread

The bid-ask spread on UWM is typically moderate, which could increase during times of high volatility.

Market Environment Factors

UWM's performance is sensitive to changes in economic growth, interest rates, and investor sentiment towards small-cap stocks. Market volatility significantly impacts its returns due to its leveraged nature.

Growth Trajectory

The growth trajectory depends on the sustained performance and volatility of the Russell 2000. There are no specific changes to strategy and holdings besides those required to maintain the leveraged objective.

Competitive Edge

ProShares Ultra Russell2000's competitive edge lies in its targeted exposure to the Russell 2000's daily performance with a 2x leverage, providing investors with an avenue for tactical short-term gains. Its advantage is the liquidity and accessibility of the ETF structure, making it easier to trade than individual derivative contracts. This allows investors to execute specific market views with amplified returns. The ETF's focus on daily performance resets mitigates the risk of long-term decay, appealing to active traders rather than long-term investors.

Volatility

UWM exhibits significantly higher volatility than the Russell 2000 due to its leveraged nature, making it a high-risk investment.

Market Risk

The ETF is exposed to the market risk associated with small-cap stocks, which can be more volatile than large-cap stocks. The use of leverage magnifies these risks.

Ideal Investor Profile

UWM is suitable for sophisticated investors with a high-risk tolerance who seek short-term, tactical exposure to the Russell 2000. It's not recommended for buy-and-hold investors or those with a low-risk tolerance.

Market Risk

UWM is best for active traders seeking to capitalize on short-term market movements. It's not suitable for long-term investors due to the compounding effects of daily rebalancing and leverage.

ProShares Ultra Russell2000 (UWM) is a leveraged ETF providing twice the daily performance of the Russell 2000, designed for short-term tactical trading, not long-term investment. Its leveraged nature makes it a high-risk, high-reward product, subject to significant volatility and compounding effects. The ideal investor has a high-risk tolerance, and understands the intricacies of leveraged products. While UWM allows traders to magnify short-term gains, it is essential to acknowledge that losses can be equally amplified and that performance can significantly deviate from the underlying index over the long term.

Data Sources:

• ProShares official website
• SEC filings
• Yahoo Finance
• Bloomberg

Disclaimers:

The information provided is for informational purposes only and should not be considered financial advice. Past performance is not indicative of future results. Investing in leveraged ETFs involves significant risks, including the potential for substantial losses.