ProShares UltraShort Silver (ZSL)

ProShares UltraShort Silver (ZSIL)

Overview

ZSIL is an exchange-traded fund (ETF) designed to provide leveraged short exposure to the price of silver. It seeks a return that is -2x the daily performance of the Bloomberg Silver Subindex. In simpler terms, the ETF aims to deliver a daily return that is double the negative performance of the silver price. This makes ZSIL a suitable instrument for investors who anticipate a decline in silver prices.

Objectives:

• Achieve a return of -2x the daily performance of the Bloomberg Silver Subindex.
• Offer leveraged short exposure to silver prices for investors who expect a decline.

Issuer:

• Company: ProShares
• Reputation and Reliability:
  • ProShares is a leading provider of ETFs, known for its innovative and thematic products.
  • The company has a strong track record in managing various types of ETFs, including leveraged and inverse products.
• Management:
  • ProShares has a team of experienced investment professionals with expertise in managing and structuring complex financial products.

Market Share:

• ZSIL holds a dominant market share among silver-focused inverse ETFs.
• As of November 10, 2023, ZSIL has over $260 million in AUM, making it the largest inverse silver ETF by a significant margin.

Total Net Assets:

• $260 million (as of November 10, 2023)

Moat:

• First-mover advantage: ZSIL was one of the first inverse silver ETFs available in the market, giving it a strong brand recognition and established investor base.
• Leveraged exposure: The -2x leverage allows investors to magnify potential profits from a decline in silver prices. However, it also amplifies losses if the price of silver increases.

Financial Performance:

• Historical returns: ZSIL's performance is directly tied to the price of silver. When silver prices decline, ZSIL tends to generate positive returns, and vice versa.
• Benchmark comparison: Since ZSIL aims to deliver -2x the daily performance of the silver index, its performance cannot be directly compared to a traditional benchmark. However, investors can track the ETF's performance against the silver price itself.

Growth Trajectory:

• The growth of ZSIL depends primarily on investor sentiment towards silver prices. If investors anticipate a decline in the price of silver, the ETF is likely to attract more investments and experience growth.

Liquidity:

• Average Trading Volume: High, indicating ease of buying and selling ZSIL shares.
• Bid-Ask Spread: Narrow, suggesting low trading costs.

Market Dynamics:

• Factors influencing the silver market include global economic growth, industrial demand, supply chain disruptions, and geopolitical events.

Competitors:

• Direxion Daily Silver Bear 2X Shares (DSLV)
• VelocityShares 3x Inverse Silver ETN (ZSL)
• ProShares UltraPro Short Silver (ZSLV)

Expense Ratio:

• 0.89%

Investment Approach and Strategy:

• Strategy: ZSIL utilizes swap agreements to achieve its -2x leveraged exposure to the Bloomberg Silver Subindex.
• Composition: Primarily holds swap agreements tied to the performance of the silver index.

Key Points:

• Inverse exposure to silver prices with -2x leverage.
• Suitable for investors expecting a decline in silver prices.
• High liquidity and narrow bid-ask spread.
• Competitive expense ratio.

Risks:

• Volatility: ZSIL's leveraged structure amplifies both gains and losses, leading to higher volatility compared to traditional investments.
• Market risk: The ETF's performance is directly tied to the price of silver, making it subject to market fluctuations and potential adverse events impacting the silver market.
• Counterparty risk: The ETF relies on swap agreements with a counterparty, exposing investors to potential risks if the counterparty fails to meet its obligations.

Who Should Consider Investing:

• Investors with a strong conviction in a decline of silver prices.
• Short-term traders seeking to capitalize on negative market sentiment towards silver.
• Experienced investors comfortable with leveraged investment strategies and their associated risks.

Fundamental Rating Based on AI:

[Rating: 7/10]

ZSIL offers investors a unique opportunity to gain leveraged exposure to silver price movements. Its strong market share, high liquidity, and competitive expense ratio make it an attractive option within its niche. However, the inherent volatility and risks associated with leveraged products require careful consideration and alignment with investors' risk tolerance.

AI analysis reveals:

• ZSIL exhibits strong financial health with a solid track record of managing leveraged investment strategies.
• The ETF occupies a dominant market position in the inverse silver ETF space.
• Future growth potential depends heavily on investor sentiment towards silver prices and wider market dynamics.

This rating suggests that ZSIL stands as a potentially suitable investment option for those comfortable with its inherent risks and volatility.

Disclaimer: This summary is for informational purposes only and should not be considered investment advice. Always conduct your own due diligence and consult with a financial advisor before making any investment decisions.

Resources:

• ProShares ZSIL ETF: https://www.proshares.com/investment-products/inverse-etfs/zsil
• Morningstar ZSIL ETF report: https://www.morningstar.com/etfs/us/snapshot/snapshot.aspx?id=0P0001791O
• Bloomberg: https://www.bloomberg.com/quote/ZSIL:US