ProShares Ultra Industrials (UXI)

Overview

ProShares Ultra Industrials (UXI) seeks daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the Dow Jones U.S. Industrials Index. It provides leveraged exposure to U.S. industrial sector equities.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs, with a solid track record in providing these types of products.

Management Expertise

ProShares has a team with experience in managing complex ETF products, including leveraged and inverse funds.

Goal

To seek daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the Dow Jones U.S. Industrials Index.

Investment Approach and Strategy

Strategy: This ETF uses a leveraged strategy, aiming for 2x the daily returns of its underlying index.

Composition Primarily holds financial instruments and derivatives that provide leveraged exposure to the Dow Jones U.S. Industrials Index, rather than directly holding the underlying stocks.

Market Share: UXI has a smaller market share compared to non-leveraged industrial sector ETFs.

Total Net Assets (AUM): 32.09

Key Competitors

• XLI
• VIS
• IYT

Competitive Landscape

The competitive landscape is dominated by broad-based industrial ETFs like XLI. UXI offers leveraged exposure, a niche within the sector, giving it an advantage for short-term traders but making it less suitable for long-term investors due to amplified volatility and decay.

Historical Performance: Historical performance is highly volatile and dependent on the underlying index's daily movements. Due to leverage, long-term returns can deviate significantly from 2x the index's cumulative return.

Benchmark Comparison: The ETF aims to achieve 2x daily performance relative to the Dow Jones U.S. Industrials Index, but tracking error and compounding effects can impact long-term correlation.

Expense Ratio: 0.95

Average Trading Volume

UXI exhibits moderate average daily trading volume, suggesting acceptable liquidity for most retail investors.

Bid-Ask Spread

The bid-ask spread can be wider than non-leveraged ETFs due to its leveraged nature and potentially lower trading volume, increasing trading costs.

Market Environment Factors

Economic indicators, manufacturing activity, and infrastructure spending heavily influence UXI's performance.

Growth Trajectory

Growth depends on the overall health of the industrial sector and the appetite for leveraged products. There are no significant changes to the underlying leverage strategy.

Competitive Edge

UXI's primary advantage is its leveraged exposure, appealing to traders seeking amplified daily returns in the industrial sector. It offers a specific tool for short-term tactical plays based on anticipated daily movements. However, this leverage also means increased risk and is unsuitable for most long-term investors. The leverage strategy is clearly defined and consistently applied. No other competitive advantages.

Volatility

High volatility is inherent due to the 2x leverage factor, making it unsuitable for risk-averse investors.

Market Risk

Market risk is amplified due to the leverage, meaning losses can be significant if the industrial sector performs poorly.

Ideal Investor Profile

Short-term traders and sophisticated investors who understand the risks of leveraged ETFs and are seeking amplified daily returns in the industrial sector are the ideal investors.

Market Risk

Best suited for active traders seeking short-term gains, not for long-term investors or passive index followers.

ProShares Ultra Industrials (UXI) is a leveraged ETF designed to provide twice the daily performance of the Dow Jones U.S. Industrials Index. It is suitable for short-term, active traders willing to accept high volatility for potentially higher returns. Long-term investors should be wary, as compounding effects can significantly deviate from the expected 2x returns. The ETF is a niche product with limited diversification and should be used with caution, understanding its leveraged nature.

Data Sources:

• ProShares website
• ETFdb.com
• Morningstar

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investing in ETFs involves risks, including the potential loss of principal. Leveraged ETFs are particularly risky and should only be considered by experienced investors who understand their risks.