ProShares Ultra MSCI Emerging Markets (EET)

Overview

ProShares Ultra MSCI Emerging Markets (EEO) seeks to deliver twice (2x) the daily performance of the MSCI Emerging Markets Index. It is a leveraged ETF focusing on emerging markets equities, primarily employing a derivatives-based strategy.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs, with a solid track record of providing products that generally perform as designed.

Management Expertise

ProShares has a dedicated team with experience in managing leveraged and inverse ETFs, employing sophisticated strategies to track daily index movements.

Goal

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

Investment Approach and Strategy

Strategy: EEO aims to deliver twice the daily performance of the MSCI Emerging Markets Index using financial instruments such as swaps, futures contracts, and other derivatives.

Composition The ETF primarily holds derivatives linked to the MSCI Emerging Markets Index, with a small portion in cash or money market instruments.

Market Share: Data is unavailable for precise market share breakdown due to the complexity of tracking derivatives-based ETF market share across various emerging market ETFs.

Total Net Assets (AUM): 64600000

Key Competitors

• VWO
• IEMG
• EEM

Competitive Landscape

The competitive landscape for emerging market ETFs is dominated by large, unleveraged ETFs like VWO, IEMG, and EEM. EEO offers a leveraged play on emerging markets, appealing to traders seeking short-term amplified returns, but carries higher risks. Its advantage lies in its leverage, while its disadvantage is the increased volatility and potential for amplified losses.

Historical Performance: Historical performance data is highly volatile and can fluctuate significantly due to the leveraged nature of the ETF. Past performance is not indicative of future results.

Benchmark Comparison: The ETF's performance should be compared to 2x the daily performance of the MSCI Emerging Markets Index, keeping in mind the potential for tracking error and the compounding effect of daily resets.

Expense Ratio: 0.95

Average Trading Volume

The average trading volume of EEO is moderate, providing sufficient liquidity for most traders, but higher volume is needed for big traders to reduce the risk of price slippage.

Bid-Ask Spread

The bid-ask spread can be wider than non-leveraged ETFs, reflecting the higher cost of trading a leveraged product; this means traders have to pay relatively more to open and close the order.

Market Environment Factors

EEO's performance is highly sensitive to economic indicators, geopolitical events, and currency fluctuations in emerging markets. Changes to regulations on margin or derivatives may also impact the fund.

Growth Trajectory

The ETF's growth is tied to investor sentiment towards emerging markets and the demand for leveraged investment products. Strategy changes are unlikely, as the fund's objective is to track 2x the daily performance of the index.

Competitive Edge

EEO's primary advantage is its leveraged exposure, allowing investors to potentially amplify gains from the MSCI Emerging Markets Index. It caters to short-term traders and those with high-risk tolerance who seek to capitalize on short-term market movements. This focus differentiates it from traditional, unleveraged emerging market ETFs. However, its leveraged nature also means amplified losses and increased volatility compared to its competitors. It's a niche product for sophisticated investors familiar with leveraged ETFs.

Volatility

EEO exhibits high volatility due to its leveraged nature. Daily resets can lead to significant deviations from the expected return over longer periods.

Market Risk

The ETF is subject to market risk associated with emerging market equities, including economic instability, political risk, and currency risk. The leverage magnifies these risks.

Ideal Investor Profile

EEO is best suited for sophisticated, short-term traders with a high-risk tolerance who understand the complexities of leveraged ETFs. It is not appropriate for long-term investors.

Market Risk

EEO is best for active traders seeking to capitalize on short-term movements in the MSCI Emerging Markets Index. It is not suitable for passive index followers or long-term investors.

ProShares Ultra MSCI Emerging Markets (EEO) is a leveraged ETF designed to deliver twice the daily performance of the MSCI Emerging Markets Index. It caters to experienced traders with high-risk tolerance seeking short-term gains in emerging markets. Due to its leveraged nature, it's highly volatile and not appropriate for long-term investment strategies. Its performance can deviate significantly from the index over longer periods, making it a speculative tool rather than a core portfolio holding.

Data Sources:

• ProShares website
• MSCI website
• Morningstar
• Yahoo Finance

Disclaimers:

The information provided is for informational purposes only and does not constitute financial advice. Investing in leveraged ETFs involves significant risks, and investors should carefully consider their investment objectives and risk tolerance before investing.