ProShares UltraShort Bloomberg Crude Oil (SCO)

Overview

ProShares UltraShort Bloomberg Crude Oil (SCO) seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the Bloomberg WTI Crude Oil Subindex. It is designed for sophisticated investors seeking to profit from a short-term decline in crude oil prices.

Reputation and Reliability

ProShares is a well-known issuer specializing in leveraged and inverse ETFs. They are generally considered reliable, but their products are complex and risky.

Management Expertise

ProShares has a dedicated management team with experience in designing and managing complex investment products.

Goal

To seek daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the Bloomberg WTI Crude Oil Subindex.

Investment Approach and Strategy

Strategy: Inverse leveraged ETF designed to deliver -2x the daily performance of the Bloomberg WTI Crude Oil Subindex.

Composition The ETF holds swap agreements and futures contracts on crude oil.

Market Share: SCO's market share varies depending on the overall market for inverse oil ETFs, but it's a significant player.

Total Net Assets (AUM): 76.22

Key Competitors

• MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU)
• Direxion Daily Energy Bear 3X Shares (ERY)
• ProShares Short Oil & Gas (DDG)

Competitive Landscape

The market is moderately competitive, with several ETFs offering inverse or leveraged exposure to oil and energy sectors. SCO benefits from ProShares' established brand, but faces competition on fees and leverage ratios. Competitors offer varying degrees of leverage and track different indices. SCO's advantage is its specific focus on -2x the daily performance of the Bloomberg WTI Crude Oil Subindex.

Historical Performance: Historical performance is highly dependent on crude oil price movements. Due to the leveraged and inverse nature, long-term performance can deviate significantly from -2x the underlying index's cumulative return.

Benchmark Comparison: The ETF should be compared to -2x the daily performance of the Bloomberg WTI Crude Oil Subindex. Expect deviations due to compounding effects.

Expense Ratio: 0.95

Average Trading Volume

SCO typically exhibits good liquidity, with an average daily trading volume that allows for relatively easy entry and exit.

Bid-Ask Spread

The bid-ask spread is generally tight, but can widen during periods of high volatility in the crude oil market.

Market Environment Factors

Crude oil supply and demand, geopolitical events, inventory levels, and global economic growth all significantly impact SCO's performance.

Growth Trajectory

SCO's growth is tied to investor sentiment regarding the future direction of crude oil prices. There are no fundamental changes to its overall strategy and holdings.

Competitive Edge

SCO's competitive edge lies in its specific inverse leveraged exposure to crude oil, offering a tool for sophisticated investors to profit from short-term price declines. The ETF's simple approach of providing -2x daily leverage provides a fairly well understood structure for short-term speculative trades. ProShares' established brand and distribution network further supports the ETF. However, due to the risks associated with leveraged ETFs, and it is not designed for all investors.

Volatility

SCO is highly volatile due to its leveraged and inverse nature. Small changes in crude oil prices can result in significant gains or losses.

Market Risk

The primary market risk is the price volatility of crude oil. The leveraged nature of the ETF magnifies this risk, and daily resets can erode returns over time, especially during volatile periods.

Ideal Investor Profile

Sophisticated investors with a high-risk tolerance who understand the risks of leveraged and inverse ETFs and have a short-term outlook on crude oil prices.

Market Risk

Best suited for active traders with a short-term investment horizon, not long-term investors or passive index followers.

ProShares UltraShort Bloomberg Crude Oil (SCO) is a leveraged inverse ETF designed for sophisticated investors seeking short-term profits from a decline in crude oil prices. Due to its -2x leverage factor, its performance is highly volatile and subject to compounding effects, making it unsuitable for long-term investment. Its success relies heavily on accurately predicting the direction of crude oil prices on a daily basis. Competitors exist, but SCO provides a niche product within the market. Investors should carefully consider the risks associated with leveraged ETFs before investing.

Data Sources:

• ProShares website
• Bloomberg
• SEC filings

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Leveraged and inverse ETFs are complex financial instruments and involve significant risks. Consult with a qualified financial advisor before making any investment decisions.