ProShares Short Russell2000 (RWM)

Overview

The ProShares Short Russell2000 (RWM) is an exchange-traded fund that seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the Russell 2000 Index. It provides a way for investors to profit from a decline in small-cap stocks.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs, with a strong track record of providing products that track their stated objectives.

Management Expertise

ProShares has a dedicated team with expertise in managing complex ETFs, including inverse and leveraged products.

Goal

To deliver daily investment results that correspond to the inverse (-1x) of the daily performance of the Russell 2000 Index.

Investment Approach and Strategy

Strategy: The ETF employs a strategy that uses financial instruments such as swap agreements, futures contracts, and options on securities, indexes and interest rates.

Composition The ETF primarily invests in financial instruments (derivatives) designed to provide inverse exposure to the Russell 2000 Index.

Market Share: RWM's market share within the inverse small-cap ETF category is considerable, although it fluctuates with market conditions and investor sentiment.

Total Net Assets (AUM): 442823200

Key Competitors

• Direxion Daily Small Cap Bear 3X Shares (TZA)
• SDS (ProShares UltraShort S&P500)

Competitive Landscape

The competitive landscape consists of other inverse and leveraged ETFs that target similar segments of the market. RWM's advantage lies in its direct inverse exposure to the Russell 2000, but it faces competition from leveraged products like TZA which offer amplified returns (and risks). Its disadvantage is that single inverse ETFs may not be suitable for long-term investments due to compounding effects.

Historical Performance: Historical performance can vary significantly based on the performance of the Russell 2000 Index, generally showing negative returns when the index rises and positive returns when the index falls. Data not directly available due to the nature of the ETF.

Benchmark Comparison: The ETF's performance is directly tied to the inverse of the Russell 2000 Index; tracking is generally very close on a daily basis before fees and expenses.

Expense Ratio: 0.95

Average Trading Volume

RWM generally exhibits good liquidity with a relatively high average trading volume.

Bid-Ask Spread

The bid-ask spread is typically narrow, reflecting good liquidity and ease of trading.

Market Environment Factors

Economic indicators, interest rate changes, and investor sentiment towards small-cap stocks significantly affect RWM's performance.

Growth Trajectory

RWM's assets and trading volume tend to increase during periods of market uncertainty or when investors anticipate a decline in small-cap stocks.

Competitive Edge

RWM's primary advantage is its direct inverse exposure to the Russell 2000, providing a straightforward tool for investors to hedge or profit from a decline in small-cap stocks. Its focused approach and established track record differentiate it from broader market inverse ETFs. The fund is well-managed by ProShares and is highly liquid which gives advantages to short term traders. However it is not advantageous for the long term traders due to its nature of derivatives.

Volatility

RWM is inherently volatile, as its performance is directly linked to the inverse of the Russell 2000 Index.

Market Risk

The ETF is exposed to market risk, particularly the risk of a sustained increase in the Russell 2000, which would lead to losses for the ETF.

Ideal Investor Profile

The ideal investor is a sophisticated trader or investor with a short-term outlook who is seeking to hedge their portfolio against a potential decline in small-cap stocks or to profit from such a decline.

Market Risk

RWM is best suited for active traders with a short-term investment horizon rather than long-term investors due to the effects of compounding and the potential for significant losses over extended periods.

ProShares Short Russell2000 (RWM) offers investors a way to profit from, or hedge against, declines in small-cap stocks by providing the inverse of the daily return of the Russell 2000 index. RWM is best suited for experienced traders with a short-term view and a deep understanding of market risks. Investors need to actively manage their positions and be aware of the potential impact of compounding when holding inverse ETFs. Given its nature, it is not appropriate for long-term or passive investment strategies.

Data Sources:

• ProShares website
• SEC filings
• Yahoo Finance
• Investopedia

Disclaimers:

The information provided is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Investing in ETFs involves risk, including the potential loss of principal.