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 provides leveraged exposure to the basic materials sector, aiming to profit from declines in the sector.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs. They have a substantial track record, though leveraged products inherently carry significant risk.

Management Expertise

ProShares focuses on providing specific exposures through index tracking, with a team experienced in managing complex ETF structures.

Goal

To deliver two times the inverse 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 leverage to amplify inverse performance on a daily basis.

Composition The ETF does not hold physical assets like stocks but uses derivatives such as swap agreements to achieve its leveraged inverse objective.

Market Share: SMN's market share within the inverse/leveraged basic materials ETF space is moderate compared to broader market ETFs.

Total Net Assets (AUM): 28100000

Key Competitors

• DRRE
• MATS
• FXZ

Competitive Landscape

The competitive landscape includes other sector-specific and inverse/leveraged ETFs. SMN offers a highly specific, short-term investment vehicle within the basic materials space, and it competes with non-leveraged ETFs or broader market plays for investor attention. Its leveraged nature offers both higher risk and potential reward compared to non-leveraged options.

Historical Performance: Historical performance is highly dependent on the Dow Jones U.S. Basic Materials Index and its short-term movements. Leveraged inverse ETFs are designed for short-term use and should not be evaluated on long-term returns.

Benchmark Comparison: The ETF's performance should be compared to -2x the daily performance of the Dow Jones U.S. Basic Materials Index. Deviations may occur due to fees, expenses, and compounding effects.

Expense Ratio: 0.95

Average Trading Volume

The average trading volume of SMN is moderate, which may affect the ease of entering and exiting positions.

Bid-Ask Spread

The bid-ask spread is typically moderate, indicating a reasonable cost for trading.

Market Environment Factors

Economic indicators, commodity prices, regulatory changes, and global trade policies significantly influence the basic materials sector and, consequently, SMN's performance.

Growth Trajectory

The growth trajectory is linked to investor sentiment and predictions regarding the basic materials sector's performance. Changes in economic forecasts and investment strategies can impact demand.

Competitive Edge

SMN's competitive advantage lies in its leveraged inverse exposure, allowing sophisticated investors to express short-term bearish views on the basic materials sector. It is one of the few ETFs offering this specific type of exposure. The advantage is its ease of use via an ETF structure. However, investors must fully understand the complexities of leveraged inverse products and their potential for rapid value erosion.

Volatility

SMN exhibits high volatility due to its leveraged nature and the volatility inherent in the basic materials sector.

Market Risk

The ETF is highly susceptible to market risk associated with the basic materials sector, including fluctuations in commodity prices, economic cycles, and regulatory changes.

Ideal Investor Profile

Sophisticated investors with a short-term bearish outlook on the basic materials sector and a thorough understanding of leveraged inverse ETFs are the ideal investors.

Market Risk

SMN is suitable for active traders seeking short-term tactical positions, not for long-term investors or passive index followers.

ProShares UltraShort Basic Materials (SMN) is a leveraged inverse ETF designed for short-term trading in the basic materials sector. It aims to deliver -2x the daily performance of the Dow Jones U.S. Basic Materials Index. Due to its leveraged nature, it's highly volatile and best suited for sophisticated investors with a bearish outlook and expertise in inverse products. SMN is not appropriate for long-term investment strategies.

Data Sources:

• ProShares website
• ETFdb.com
• Yahoo Finance

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Leveraged and inverse ETFs are complex instruments and may not be suitable for all investors. Past performance is not indicative of future results.