ProShares UltraShort Russell2000 (TWM)

Overview

The ProShares UltraShort Russell2000 (TWM) seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the Russell 2000 Index. It aims to deliver magnified, opposite returns relative to the small-cap Russell 2000 index, primarily through the use of derivatives.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs, with a reputation for providing sophisticated investment tools.

Management Expertise

ProShares has a dedicated team with expertise in managing leveraged and inverse ETFs, employing strategies to achieve targeted daily returns.

Goal

To provide daily investment results (before fees and expenses) that correspond to two times the inverse (-2x) of the daily performance of the Russell 2000 Index.

Investment Approach and Strategy

Strategy: The ETF employs a leveraged, inverse strategy using derivatives to achieve its objective. It is designed for short-term tactical positions.

Composition The ETF uses financial instruments, such as swap agreements, futures contracts and options to provide investment results that correlate to its objective. Its AUM is not invested directly in stocks.

Market Share: TWM has a moderate market share within the leveraged/inverse small-cap ETF category.

Total Net Assets (AUM): 123000000

Key Competitors

• Direxion Daily Small Cap Bear 3X Shares (TZA)
• ProShares Short Russell2000 (RWM)

Competitive Landscape

The competitive landscape is dominated by leveraged and inverse ETFs seeking to capitalize on short-term market movements. TWM competes primarily with other -2x and -3x leveraged inverse Russell 2000 ETFs. A key advantage of TWM could be its tracking effectiveness, while disadvantages may include higher volatility and decay.

Historical Performance: Historical performance is highly dependent on the Russell 2000's performance and the ETF's leveraged inverse structure. Performance results can be volatile and negative in upward-trending markets.

Benchmark Comparison: The benchmark is the inverse of the Russell 2000 Index, multiplied by two. Performance should be compared against this theoretical return, considering tracking error and compounding effects.

Expense Ratio: 0.95

Average Trading Volume

Average trading volume is moderate, typically between 300,000 and 800,000 shares daily, indicating reasonable liquidity.

Bid-Ask Spread

The bid-ask spread is typically wider than non-leveraged ETFs, reflecting the complexity and risk associated with the product.

Market Environment Factors

The ETF is affected by small-cap market sentiment, interest rates, economic growth, and overall market volatility. Downward trends in the Russell 2000 generally benefit TWM.

Growth Trajectory

Growth depends on investors' appetite for shorting the Russell 2000 and utilizing leveraged inverse products. Significant market downturns can drive increased demand.

Competitive Edge

TWM's competitive edge lies in its established presence as a leading -2x leveraged inverse Russell 2000 ETF. It offers investors a readily accessible tool to bet against small-cap stocks. However, the leveraged nature and daily reset feature are not for all investors. The product is suitable for very short-term tactical positions and requires active management.

Volatility

Volatility is very high due to the leveraged nature of the fund, compounded by the volatility inherent in small-cap stocks.

Market Risk

Market risk is significant, as the ETF is designed to move inversely to the Russell 2000. Unexpected upward movements in the Russell 2000 can lead to substantial losses.

Ideal Investor Profile

The ideal investor is a sophisticated trader with a short-term outlook who understands the risks associated with leveraged and inverse ETFs.

Market Risk

TWM is best suited for active traders with a bearish outlook on small-cap stocks. It is not appropriate for long-term investors or passive index followers.

ProShares UltraShort Russell2000 (TWM) is a leveraged inverse ETF designed for short-term tactical trading. It offers investors a way to profit from declines in the Russell 2000 index. However, its leveraged structure and daily reset feature make it highly volatile and unsuitable for long-term investments. Due to the compounding effect, the fund's performance over longer periods may deviate significantly from the -2x daily return objective, and can lead to substantial losses even if the underlying index trends downward over the long term.

Data Sources:

• ProShares website
• ETF.com
• Yahoo Finance

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investing in leveraged ETFs involves significant risks, including the potential for substantial losses.