ProShares UltraShort MidCap400 (MZZ)

Overview

ProShares UltraShort MidCap400 (SMK) seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the S&P MidCap 400 Index. It offers a leveraged inverse exposure to the mid-cap market.

Reputation and Reliability

ProShares is a well-known issuer specializing in leveraged and inverse ETFs. They have a long track record, but leveraged/inverse products carry unique risks.

Management Expertise

ProShares has extensive experience managing leveraged and inverse ETFs, requiring specialized knowledge of derivatives and market timing.

Goal

To provide daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the S&P MidCap 400 Index.

Investment Approach and Strategy

Strategy: The ETF uses financial instruments such as swaps, futures contracts, and forward contracts to achieve its -2x leveraged inverse exposure to the S&P MidCap 400 Index on a daily basis.

Composition The ETF holds primarily derivatives, including swap agreements, futures contracts, and potentially a small allocation to cash or cash equivalents to manage margin requirements.

Market Share: Data unavailable.

Total Net Assets (AUM): 28950000

Key Competitors

• SH (ProShares Short S&P500)
• SDS (ProShares UltraShort S&P500)
• XIV (VelocityShares Daily Inverse VIX Short Term ETN)
• SPXU (ProShares UltraPro S&P500)

Competitive Landscape

The leveraged and inverse ETF space is highly competitive. SMK is a niche product focused on mid-cap inverse performance. Its advantages lie in the specific exposure it provides, while its disadvantages include higher risk, potential for decay, and daily reset, making it unsuitable for long-term holding. Competitors offer broader market exposure or different leverage ratios.

Historical Performance: Historical performance data is unavailable but would be significantly impacted by market conditions and daily compounding effects.

Benchmark Comparison: The ETF aims to inversely track the S&P MidCap 400 Index with -2x leverage. Due to the leverage and daily reset, long-term performance can deviate significantly from a simple -2x return of the index.

Expense Ratio: 0.95

Average Trading Volume

The average trading volume is 25000 shares, suggesting moderate liquidity.

Bid-Ask Spread

The typical bid-ask spread is $0.16, indicating a moderate trading cost.

Market Environment Factors

Performance is highly sensitive to mid-cap market movements, economic cycles, interest rates, and investor sentiment. Economic downturns typically benefit inverse ETFs.

Growth Trajectory

The ETF's growth trajectory depends on the sustained demand for inverse mid-cap exposure and the ability of ProShares to effectively manage the fund's derivatives strategy. Changes to strategy and holdings are dictated by the need to maintain the -2x daily inverse exposure.

Competitive Edge

SMK's competitive advantage is its focused exposure to the inverse performance of mid-cap stocks with 2x leverage. This caters to investors seeking short-term hedging or speculative opportunities on the mid-cap market. The ETF provides a tool for actively managing risk or capitalizing on perceived market downturns. ProShares' expertise in managing leveraged and inverse funds provides some operational advantages, allowing for precise execution of the stated investment goal, however this is offset by the volatile nature of this type of investment.

Volatility

The ETF is highly volatile due to the 2x leverage and inverse nature, making it prone to significant daily fluctuations.

Market Risk

The primary risk is that the S&P MidCap 400 Index rises, leading to losses. Compounding effects due to daily resets can erode value over longer periods, even if the index exhibits sideways movement.

Ideal Investor Profile

The ideal investor is an experienced, sophisticated trader seeking short-term, tactical exposure to the inverse performance of mid-cap stocks. They should understand the risks associated with leveraged and inverse ETFs and use it for hedging or speculative purposes.

Market Risk

SMK is not suitable for long-term investors or passive index followers. It is designed for active traders who closely monitor the market and have a clear understanding of the risks involved.

ProShares UltraShort MidCap400 (SMK) is a leveraged inverse ETF designed for short-term tactical trading. It provides -2x exposure to the daily performance of the S&P MidCap 400 Index, making it a tool for hedging or speculating on mid-cap market downturns. Due to the leverage and daily reset, it is not suitable for long-term investment and carries significant risk. Investors should fully understand the ETF's mechanics and risks before investing, as compounding effects can erode value over time.

Data Sources:

• ProShares website
• SEC filings
• Financial data providers

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Investing in leveraged and inverse ETFs involves significant risks, including the potential for substantial losses. Consult with a financial advisor before making any investment decisions.