ProShares Ultra Basic Materials (UYM)

Overview

ProShares Ultra Basic Materials (UYM) seeks daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the Dow Jones U.S. Basic Materials Index. It is a leveraged ETF focused on the basic materials sector, including chemicals, mining, and paper companies. It aims to amplify the daily returns of this sector.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs with a solid track record.

Management Expertise

ProShares specializes in managing leveraged and inverse funds, demonstrating expertise in this complex area.

Goal

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

Investment Approach and Strategy

Strategy: Tracks the Dow Jones U.S. Basic Materials Index with 2x daily leverage.

Composition Primarily holds financial instruments such as swap agreements and futures contracts that aim to replicate twice the daily performance of the underlying index. Also holds stocks within the Dow Jones U.S. Basic Materials Index.

Market Share: UYM's market share in the leveraged basic materials ETF sector is significant but depends on overall AUM and trading volume relative to competitors, which varies.

Total Net Assets (AUM): 77660000

Key Competitors

• FMAT
• XLB
• IYM

Competitive Landscape

The basic materials ETF market is dominated by unleveraged ETFs like XLB. UYM offers leveraged exposure, attracting investors seeking amplified daily returns. However, it carries higher risk due to the leverage. UYM's advantages lies in its leverage while its disadvantages stem from the risks associated with it.

Historical Performance: Historical performance varies widely depending on the basic materials sector's performance. Due to leverage, returns are amplified, both positively and negatively.

Benchmark Comparison: The ETF aims to achieve 2x the daily performance of its benchmark. Deviations may occur due to fees, expenses, and the complexities of leveraged investing.

Expense Ratio: 0.95

Average Trading Volume

UYM exhibits a moderate average trading volume, suggesting reasonable liquidity, but it can be lower than more popular ETFs.

Bid-Ask Spread

The bid-ask spread for UYM can be wider than less volatile ETFs, which can impact trading costs, especially for large trades.

Market Environment Factors

Economic growth, commodity prices, inflation, and infrastructure spending significantly impact the basic materials sector and, consequently, UYM's performance.

Growth Trajectory

Growth trajectory is heavily dependent on the overall health of the materials sector and investor appetite for leveraged products. Fluctuations in these may necessitate changes to strategy.

Competitive Edge

UYM's primary competitive advantage is its leveraged exposure, allowing investors to potentially magnify gains from the basic materials sector. This leveraged exposure provides a niche market for those seeking aggressive short-term strategies. It also offers more experienced investors with higher risk tolerance an amplified investment choice for the basic materials sector. However, it may carry a higher risk than traditional basic materials ETFs.

Volatility

UYM exhibits high volatility due to its leveraged nature. Daily fluctuations are amplified, potentially leading to significant gains or losses.

Market Risk

The ETF is subject to market risk associated with the basic materials sector, including commodity price volatility, regulatory changes, and economic cycles.

Ideal Investor Profile

UYM is suited for experienced, sophisticated investors with a high risk tolerance who seek short-term, leveraged exposure to the basic materials sector.

Market Risk

UYM is best for active traders seeking short-term gains, not long-term investors, due to the effects of compounding and volatility on leveraged ETFs.

ProShares Ultra Basic Materials (UYM) is a leveraged ETF designed to provide twice the daily performance of the Dow Jones U.S. Basic Materials Index. This fund appeals to sophisticated traders looking for amplified daily returns in the basic materials sector, and carries a higher degree of risk. Due to the effects of compounding, UYM is not suitable for long-term investment strategies, and the performance can deviate significantly from its stated objective over extended periods. Potential investors should thoroughly understand the risks of leveraged ETFs before investing in UYM.

Data Sources:

• ProShares
• Morningstar
• ETFdb.com
• YCharts

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Leveraged ETFs involve significant risks and may not be suitable for all investors.