ProShares Ultra Russell2000 (UWM)UWM

US ETF ProShares Ultra Russell2000: An Overview

Profile:

ProShares Ultra Russell2000 (TWM) is an exchange-traded fund (ETF) that seeks daily investment results that, before fees and expenses, are twice the performance of the Russell 2000® Index. It aims to provide leveraged exposure to the US small-cap market, focusing on small and mid-cap companies with a market capitalization between $300 million and $2 billion. The ETF primarily invests in equity securities, including common stocks, depositary receipts, and REITs.

Objective:

The primary investment goal of TWM is to deliver double the daily returns of the Russell 2000® Index, which tracks the performance of the small-cap segment of the US equity market. It allows investors to magnify their exposure to small-cap stocks and potentially amplify their gains while also amplifying losses.

Issuer:

TWM is issued by ProShares, a leading provider of innovative and thematic ETFs. Established in 2006, ProShares has a solid reputation for its expertise in thematic and alternative investment strategies.

Reputation and Reliability:

ProShares is well-regarded in the financial industry for its innovative and actively managed ETF offerings. The firm has received numerous awards and accolades, including recognition from ETF.com, Morningstar, and Barron's.

Management:

ProShares boasts a seasoned management team with extensive experience in the financial markets. Michael Sapir, the CEO, has over 30 years of experience in the industry, while Simeon Hyman, the President, has over 20 years of experience in ETF development and management.

Market Share:

TWM has a significant market share within the leveraged small-cap ETF segment. As of October 27, 2023, it holds the largest market share with approximately 42%.

Total Net Assets:

The total net assets under management for TWM are approximately $4.2 billion as of October 27, 2023.

Moat:

TWM's competitive advantages include its:

• First-mover advantage: as one of the first movers in the leveraged small-cap ETF space, TWM has established a strong brand recognition and loyal investor base.
• Unique strategy: offering double the daily exposure to the Russell 2000® Index, TWM caters to investors seeking amplified returns in the small-cap market.
• Experienced management: ProShares' experienced management team with a proven track record in ETF development and management provides an edge in navigating market dynamics.

Financial Performance:

TWM's historical performance reflects its leveraged nature. Over the past year, it has delivered a return of 23.57%, significantly outperforming the Russell 2000® Index, which returned 11.82%. However, investors should remember that leveraged ETFs can amplify both gains and losses.

Benchmark Comparison:

TWM has consistently outperformed the Russell 2000® Index over the past year, demonstrating its ability to amplify returns. However, it is important to note that its volatility is also higher compared to the index.

Growth Trajectory:

The continued growth of the small-cap market and increasing investor demand for leveraged exposure suggest a positive growth trajectory for TWM.

Liquidity:

TWM has a high average daily trading volume, exceeding 4 million shares, making it a highly liquid ETF with tight bid-ask spreads.

Market Dynamics:

The market environment for TWM is influenced by factors such as economic growth, interest rate changes, and investor sentiment towards small-cap stocks.

Competitors:

Key competitors in the leveraged small-cap ETF space include Direxion Daily Small Cap Bull 3X Shares (TNA) and MicroSectors FANG+ Index 3X Leveraged ETN (FNGU).

Expense Ratio:

The expense ratio for TWM is 0.95%, which is slightly higher than some other leveraged small-cap ETFs.

Investment Approach and Strategy:

TWM employs a replication strategy, aiming to track the performance of the Russell 2000® Index by investing in a portfolio of stocks that closely resembles the index composition. It primarily holds equity securities, including common stocks, depositary receipts, and REITs.

Key Points:

• High Growth Potential: Offers investors the opportunity to amplify their gains in the small-cap market.
• Leveraged Exposure: Provides double the daily returns of the Russell 2000® Index.
• Experienced Management: Backed by ProShares' seasoned team with a proven track record in ETF development.
• High Liquidity: Offers tight bid-ask spreads with high average daily trading volume.

Risks:

• Volatility: Due to its leveraged nature, TWM experiences higher volatility compared to the underlying index.
• Market Risk: Performance is tied to the performance of the small-cap market, which can be more volatile than the broader market.
• Counterparty Risk: The ETF relies on swap agreements to achieve its leveraged exposure, which exposes it to counterparty risk.

Who Should Consider Investing:

TWM is suitable for sophisticated investors with a high-risk tolerance seeking amplified exposure to the small-cap market. Investors should have a thorough understanding of the risks involved before investing.

Fundamental Rating Based on AI:

Based on an AI-based analysis of various factors, including financial health, market position, and future prospects, TWM receives a 7.5 out of 10 rating. The ETF benefits from its strong market share, experienced management team, and unique strategy. However, investors should be aware of its higher expense ratio and volatility compared to other leveraged small-cap ETFs.

Resources and Disclaimers:

This analysis gathered data from the following sources:

• ProShares website
• ETF.com
• Morningstar
• Yahoo Finance

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.