ProShares Ultra MSCI EAFE (EFO)

Overview

The ProShares Ultra MSCI EAFE (EFO) seeks daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the MSCI EAFE Index. It provides leveraged exposure to developed markets outside of North America, making it suitable for short-term tactical strategies.

Reputation and Reliability

ProShares is a well-established issuer known for its leveraged and inverse ETFs, providing investors with tools for short-term trading and hedging strategies. They have a solid track record in offering a diverse range of specialized ETFs.

Management Expertise

ProShares benefits from experienced portfolio managers and financial professionals specializing in managing complex leveraged and inverse investment products. Their expertise is crucial in maintaining the fund's daily leverage targets and managing associated risks.

Goal

To seek daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the MSCI EAFE Index.

Investment Approach and Strategy

Strategy: The ETF employs a replication strategy to deliver twice the daily performance of the MSCI EAFE Index, which tracks the performance of large- and mid-cap equities in developed markets excluding the U.S. and Canada.

Composition The ETF primarily invests in financial instruments such as swaps, futures contracts, and other derivatives to achieve its 2x leverage objective. It also holds a small portion in cash and money market instruments.

Market Share: EFO's market share within the leveraged international equity ETF segment is moderate.

Total Net Assets (AUM): 140700000

Key Competitors

• SPXL
• UPRO
• TNA

Competitive Landscape

The leveraged ETF market is competitive. EFO's advantage lies in its specific focus on the EAFE region. However, EFO has higher volatility and requires active monitoring, making it less suitable for long-term investors than non-leveraged ETFs.

Historical Performance: Historical performance should be viewed in the context of its leveraged nature. Performance can be highly volatile, with periods of significant gains and losses.

Benchmark Comparison: The ETF aims to deliver twice the daily return of the MSCI EAFE Index, so its performance should be compared against 2x the index's daily performance. Deviations may occur due to fees, expenses, and the effects of compounding over longer periods.

Expense Ratio: 0.95

Average Trading Volume

The average daily trading volume of EFO is moderate, indicating reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread varies with market conditions but typically remains manageable for this type of ETF, although higher than non-leveraged funds.

Market Environment Factors

Economic conditions in Europe and Asia, currency fluctuations, and global trade policies significantly affect EFO. Market volatility has a magnified impact on the ETF's performance due to its leveraged nature.

Growth Trajectory

Growth is dependent on the performance of developed markets (ex-US & Canada) and investor demand for leveraged exposure. Changes in trading strategies or leverage ratios can impact holdings and performance.

Competitive Edge

EFO's competitive advantage lies in providing leveraged exposure to developed markets outside North America, allowing investors to amplify their returns or hedge their portfolio against international market movements. This specialized focus caters to investors seeking short-term trading opportunities. While leveraged ETFs are more sensitive to daily performance, it offers investors a tool for implementing tactical investment strategies. With the combination of international diversification and 2x leverage, EFO attracts certain investors and traders.

Volatility

EFO exhibits high volatility due to its leveraged nature, making it suitable for experienced traders with a high-risk tolerance.

Market Risk

The ETF is exposed to market risk associated with developed international equities, currency risk, and the amplified risk inherent in leveraged investments.

Ideal Investor Profile

The ideal investor is an experienced trader seeking short-term tactical exposure to developed international markets (ex-US and Canada). They should have a high-risk tolerance and a thorough understanding of leveraged products.

Market Risk

EFO is best suited for active traders implementing short-term strategies. It is not suitable for long-term investors or passive index followers due to its high volatility and compounding effects of daily leverage.

ProShares Ultra MSCI EAFE (EFO) provides leveraged exposure to developed international markets outside North America. Designed for short-term tactical trading, it aims to deliver twice the daily performance of the MSCI EAFE Index. The ETF offers experienced traders a tool to amplify returns or hedge portfolios. However, the high volatility and risk of compounding losses make it unsuitable for long-term investors. Investors should carefully consider their risk tolerance and time horizon before investing in EFO.

Data Sources:

• ProShares website
• MSCI
• ETF.com
• Morningstar

Disclaimers:

The data provided is for informational purposes only and should not be considered financial advice. Investment decisions should be made after consulting with a qualified financial advisor. Past performance is not indicative of future results. Leveraged ETFs are not suitable for all investors.