ProShares UltraShort Basic Materials (SMN)

Overview

ProShares UltraShort Basic Materials (SMN) seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the Dow Jones U.S. Basic Materials Index. It is designed for investors who want to profit from a decline in the basic materials sector.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs, offering a variety of strategies to profit from market movements.

Management Expertise

ProShares has a specialized team focused on managing leveraged and inverse ETFs, requiring expertise in derivatives and short-term trading strategies.

Goal

To seek daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the Dow Jones U.S. Basic Materials Index.

Investment Approach and Strategy

Strategy: Tracks the Dow Jones U.S. Basic Materials Index using a leveraged inverse strategy.

Composition Primarily utilizes derivatives like swaps, futures contracts, and options to achieve its -2x leveraged inverse objective. May also hold some cash or money market instruments.

Market Share: SMN's market share is limited to leveraged/inverse strategies within the basic materials sector.

Total Net Assets (AUM): 24.17

Key Competitors

• Direxion Daily Basic Materials Bear 3X Shares (MATS)

Competitive Landscape

The competitive landscape is limited. SMN offers -2x leverage while MATS offers -3x leverage. SMN has lower leverage than MATS, which means it will exhibit less volatility, for this reason it might be more appealing to investors with a lower risk tolerance. MATS is only preferable for investors who seek maximum inverse leverage and have a high-risk tolerance.

Historical Performance: Historical performance is highly dependent on the performance of the Dow Jones U.S. Basic Materials Index, with inverse performance observed.

Benchmark Comparison: SMN aims to provide -2x the daily performance of the Dow Jones U.S. Basic Materials Index, so its performance should be compared against this benchmark's inverse return, adjusted for leverage and fees.

Expense Ratio: 0.95

Average Trading Volume

SMN's average trading volume is about 62.95K, indicating moderate liquidity.

Bid-Ask Spread

The typical bid-ask spread for SMN is around 0.10%, which may fluctuate depending on trading activity.

Market Environment Factors

Performance is highly sensitive to economic growth, commodity prices, and regulatory changes impacting the basic materials sector.

Growth Trajectory

Growth and decline mirror the inverse and leveraged performance of the basic materials sector; no changes to strategy or holdings noted.

Competitive Edge

SMN's competitive advantage lies in its established brand and offering a -2x inverse leveraged exposure to the basic materials sector. Its focus on the daily performance and use of derivatives provide investors with a specific short-term trading tool. Its primary strength is that it enables investors to profit from short-term declines in the basic materials sector without directly shorting individual stocks, but instead trading a single ETF. This simplifies the shorting process for the overall sector. However, this ETF should not be held for the long-term, as it is not intended to replicate long-term performance of the index.

Volatility

SMN exhibits very high volatility due to its leveraged inverse structure.

Market Risk

Significant market risk is associated with fluctuations in the basic materials sector and the risks inherent to leveraged and inverse ETFs, including potential for substantial losses.

Ideal Investor Profile

Active traders and sophisticated investors who understand leveraged and inverse ETFs and want to make short-term bets against the basic materials sector are ideal.

Market Risk

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

ProShares UltraShort Basic Materials (SMN) is designed for active traders seeking short-term, leveraged inverse exposure to the basic materials sector. It aims to deliver -2x the daily performance of the Dow Jones U.S. Basic Materials Index through the use of derivatives. Due to its leveraged inverse structure, SMN is a high-risk, high-reward investment that is not suitable for long-term holding. Investors should be aware of the potential for significant losses and carefully consider its suitability within their overall portfolio before investing.

Data Sources:

• ProShares
• Bloomberg
• ETF.com

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. Leveraged and inverse ETFs are particularly risky and are suitable only for sophisticated investors.