ProShares Short Russell2000 (RWM)

Overview

The ProShares Short Russell2000 (RWM) is an exchange-traded fund designed to deliver the inverse (-1x) of the daily performance of the Russell 2000 Index, a market-capitalization-weighted index that measures the performance of approximately 2,000 small-cap companies in the Russell 3000 Index. It aims to profit from a decline in the Russell 2000 Index. It does so through derivatives such as swaps and futures contracts. This ETF is not suitable for long-term investments.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs. They have a strong track record in managing these types of products, but investors should be aware of the risks involved.

Management Expertise

ProShares has a team of experienced professionals managing its ETFs, specializing in structured products and derivative strategies.

Goal

The primary investment goal of RWM is to provide investment results that correspond to the inverse (-1x) of the daily performance of the Russell 2000 Index.

Investment Approach and Strategy

Strategy: RWM employs a strategy to deliver inverse exposure to the Russell 2000 index. This is achieved by using derivatives contracts to gain short exposure.

Composition The ETF holds a combination of swap agreements, futures contracts on the Russell 2000 index and cash equivalents to achieve its investment objective.

Market Share: Due to the nature of leveraged/inverse ETFs, quantifying market share in a traditional sense is less relevant, but the ETF captures a significant portion of assets allocated to inverse Russell 2000 strategies.

Total Net Assets (AUM): 415899000

Key Competitors

• Direxion Daily Small Cap Bear 3X Shares (TZA)
• ProShares UltraShort Russell2000 (TWM)
• MicroSectors U.S. Small Cap Index -3X Inverse Leveraged ETN (SMDD)

Competitive Landscape

The competitive landscape for inverse Russell 2000 ETFs includes several providers offering varying degrees of leverage. RWM offers a simple -1x inverse exposure, while others like TZA offer -3x leverage, attracting investors with differing risk appetites and investment horizons. RWM's advantage lies in its lower leverage, potentially reducing volatility compared to its more leveraged counterparts, but it provides less potential for magnified returns.

Historical Performance: Due to the nature of inverse ETFs, historical performance is dependent on the performance of the Russell 2000 index. Historical data is available, but its long-term trend will inversely mirror the Russell 2000.

Benchmark Comparison: RWM's performance is designed to be the inverse of the Russell 2000's daily performance. Therefore, the benchmark is the inverse of the index's daily return.

Expense Ratio: 0.95

Average Trading Volume

The average trading volume of RWM is approximately 571000 shares, suggesting reasonable liquidity.

Bid-Ask Spread

The bid-ask spread for RWM typically ranges from $0.01 to $0.03, indicating relatively low trading costs.

Market Environment Factors

Economic indicators, interest rate changes, and overall market sentiment towards small-cap companies significantly impact RWM. Expect increased investor interest during periods of economic uncertainty or anticipated decline in the Russell 2000.

Growth Trajectory

The growth trajectory of RWM is inversely correlated with the performance of the Russell 2000 index. It experiences fluctuations based on daily market sentiment and investment flows into and out of small-cap stocks.

Competitive Edge

ProShares Short Russell2000's competitive advantage lies in its established presence as a well-known inverse ETF provider. The ETF provides a straightforward way for investors to express a bearish view on small-cap stocks. Its simple -1x inverse exposure is appealing to investors seeking a less leveraged approach compared to 2x or 3x inverse ETFs. RWM has a track record and liquidity in the inverse small-cap space. As a result, RWM remains a relevant choice in the market.

Volatility

RWM can experience high volatility due to its inverse nature and the fluctuations of the Russell 2000 index. Daily resets also contribute to volatility.

Market Risk

RWM is exposed to market risk, specifically the risk associated with the Russell 2000 index. If the Russell 2000 increases, RWM will decline. Also, there is a risk with the daily resets as over longer periods, the inverse performance will not necessarily match the daily inverses.

Ideal Investor Profile

The ideal investor for RWM is someone with a short-term outlook who believes the Russell 2000 will decline. They should have a high-risk tolerance and understand the risks of inverse ETFs.

Market Risk

RWM is best suited for active traders who seek short-term hedging or speculative opportunities and is not suitable for long-term investments.

ProShares Short Russell2000 (RWM) is an inverse ETF designed to deliver the opposite of the daily performance of the Russell 2000 index, making it a tool for short-term bearish strategies on small-cap stocks. RWM is generally suitable for active traders with a high-risk tolerance. Investors should understand the ETF's daily reset feature and the risks associated with inverse ETFs. It is not recommended for long-term holdings due to the compounding effect of daily returns. The ETF's appeal lies in its ability to provide a short-term hedge or speculative investment opportunity, but investors must closely monitor market conditions and manage their positions accordingly.

Data Sources:

• ProShares.com
• etf.com
• Seeking Alpha
• Yahoo Finance

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor. Past performance is not indicative of future results. Leveraged and inverse ETFs are complex instruments and are not suitable for all investors. Please consider the investment objectives, risks, charges and expenses of the fund carefully before investing.