ProShares UltraShort Russell2000 (TWM)

Overview

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 is designed for sophisticated investors who understand the risks associated with leveraged and inverse ETFs and intend to actively monitor and manage their portfolios.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs, with a reputation for providing a wide range of these specialized investment products.

Management Expertise

ProShares has a dedicated management team with experience in structuring and managing leveraged and inverse ETFs.

Goal

To seek 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 uses financial instruments such as swap agreements, futures contracts, and options to achieve its investment objective.

Composition The ETF primarily holds derivatives contracts designed to provide the inverse leveraged exposure to the Russell 2000 index.

Market Share: TWM's market share is relatively small compared to broader market ETFs, reflecting its niche focus on leveraged inverse exposure.

Total Net Assets (AUM): 146700000

Key Competitors

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

Competitive Landscape

The competitive landscape is characterized by a few key players offering leveraged and inverse exposure to the Russell 2000. TWM offers higher leverage than RWM but lower than TZA, appealing to investors with different risk tolerances and return expectations. The primary disadvantage is the high volatility and potential for rapid value erosion due to the leveraged nature of the product.

Historical Performance: Historical performance can be highly volatile and is greatly influenced by short-term movements in the Russell 2000 index. Due to the leverage and inverse nature, long term performance is highly unlikely to reflect a simple inverse 2x return.

Benchmark Comparison: The ETF's performance is benchmarked against two times the inverse of the Russell 2000 Index's daily performance.

Expense Ratio: 0.95

Average Trading Volume

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

Bid-Ask Spread

The bid-ask spread can fluctuate depending on market conditions and trading volume.

Market Environment Factors

Economic indicators, interest rate changes, small-cap sector performance, and overall market sentiment significantly affect TWM's performance.

Growth Trajectory

The growth trajectory depends heavily on market volatility and investor demand for hedging or speculating against small-cap stocks; significant changes to strategy and holdings are unlikely.

Competitive Edge

ProShares' established brand recognition in the leveraged/inverse ETF space and a relatively long track record provide a competitive advantage. TWM offers a specific level of leverage (-2x) within the Russell 2000 inverse category. The ETF benefits from its established presence and access to sophisticated trading strategies for managing its leveraged exposure. However, the leveraged nature increases the cost of maintaining its portfolio, and its complex derivative-based structure may limit accessibility to only the savvy, specialized investor.

Volatility

TWM exhibits high volatility due to its leveraged and inverse nature.

Market Risk

Significant market risk exists due to the inverse relationship with the Russell 2000 Index. The ETF is also subject to risks associated with derivatives contracts, including counterparty risk.

Ideal Investor Profile

Sophisticated investors with a high-risk tolerance who seek short-term hedging or speculative opportunities related to the Russell 2000 index.

Market Risk

Best suited for active traders with a deep understanding of leveraged and inverse ETFs, not for long-term investors or passive index followers.

ProShares UltraShort Russell2000 is a leveraged inverse ETF designed for short-term trading and hedging strategies related to the Russell 2000 Index. It is not suitable for buy-and-hold investors due to its high volatility and potential for value erosion over time. The ETF's performance is highly dependent on the daily movements of the Russell 2000, and investors should carefully monitor market conditions. Only sophisticated investors who comprehend the risks associated with leveraged and inverse funds should consider investing in TWM.

Data Sources:

• ProShares website
• ETF.com
• Yahoo Finance

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Investors should conduct their own due diligence before making any investment decisions.