ProShares Short MSCI Emerging Markets (EUM)

Overview

ProShares Short MSCI Emerging Markets (EUM) seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the MSCI Emerging Markets Index. It provides a way to potentially profit from a decline in emerging market equities.

Reputation and Reliability

ProShares is a well-known provider of leveraged and inverse ETFs, with a strong track record in managing these types of products.

Management Expertise

ProShares has a dedicated team of portfolio managers and analysts experienced in managing inverse and leveraged investment strategies.

Goal

To provide daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the MSCI Emerging Markets Index.

Investment Approach and Strategy

Strategy: EUM employs a strategy of using financial instruments such as swap agreements and futures contracts to achieve its inverse exposure to the MSCI Emerging Markets Index.

Composition The ETF primarily holds derivatives that are designed to deliver the inverse of the daily return of the MSCI Emerging Markets Index.

Market Share: Low market share compared to broader emerging market ETFs.

Total Net Assets (AUM): 53310700

Key Competitors

• ProShares UltraShort MSCI Emerging Markets (EEV)
• Direxion Daily Emerging Markets Bear 3X Shares (EDZ)
• iShares MSCI Emerging Markets ETF (EEM)
• Vanguard FTSE Emerging Markets ETF (VWO)

Competitive Landscape

The competitive landscape is dominated by traditional emerging market ETFs like EEM and VWO, followed by leveraged and inverse products. EUM is a niche product designed for short-term hedging or speculation, offering an inverse return profile, while others provide direct exposure. EUM's disadvantage is its potential for decay over longer periods due to daily rebalancing.

Historical Performance: Due to its inverse nature, historical performance is highly dependent on the performance of the MSCI Emerging Markets Index. When the index rises, EUM is expected to decline and vice versa.

Benchmark Comparison: The ETF's performance is designed to be the inverse of the MSCI Emerging Markets Index on a daily basis, but deviations may occur due to fees and tracking error.

Expense Ratio: 0.95

Average Trading Volume

EUM exhibits moderate liquidity with an average trading volume sufficient for typical trading sizes.

Bid-Ask Spread

The bid-ask spread is usually reasonable, but it can widen during periods of increased market volatility.

Market Environment Factors

EUM is heavily influenced by economic growth, political stability, and currency fluctuations within emerging markets. Negative news or sentiment towards emerging markets will likely benefit EUM.

Growth Trajectory

The growth trajectory of EUM is inversely related to the performance of emerging markets. Significant declines in emerging markets could lead to an increase in the value of EUM, while positive performance in emerging markets would cause the value to decrease.

Competitive Edge

EUM's competitive edge lies in its ability to provide investors with a simple and efficient way to bet against emerging markets. It offers a direct inverse relationship to the MSCI Emerging Markets Index, allowing investors to profit from downturns or hedge existing emerging market portfolios. Unlike simply shorting individual stocks, it provides broad exposure to the emerging market index. However, EUM is not designed for long-term investment and may suffer from return decay over extended periods.

Volatility

EUM is likely to exhibit high volatility, particularly during times of market stress.

Market Risk

EUM is exposed to market risk related to emerging markets, currency fluctuations, and the risk associated with using derivatives. The daily rebalancing can also lead to erosion of value over time if held for longer periods, especially in volatile markets.

Ideal Investor Profile

The ideal investor for EUM is a sophisticated trader who is looking for a short-term hedge against emerging market exposure or seeks to profit from a decline in emerging markets.

Market Risk

EUM is best suited for active traders with a high-risk tolerance and a short-term investment horizon. It is not appropriate for long-term investors.

ProShares Short MSCI Emerging Markets (EUM) is designed to provide the inverse of the daily performance of the MSCI Emerging Markets Index. This ETF is suitable for short-term hedging or speculation on emerging market downturns, not for long-term investing. Its value depends heavily on the emerging markets' dynamics and its performance erodes over time due to daily rebalancing. Investors must have a high-risk tolerance and understand the complexities of inverse ETFs before investing in EUM.

Data Sources:

• ProShares
• Morningstar
• Bloomberg

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investing in ETFs involves risk, including the potential loss of principal.