ProShares Ultra MSCI Brazil Capped (UBR)

Overview

The ProShares Ultra MSCI Brazil Capped (UBR) is a leveraged ETF that seeks daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the MSCI Brazil 25/50 Index. It provides amplified exposure to Brazilian equities.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs, recognized for its innovation in this space. They have a track record of managing complex investment products.

Management Expertise

ProShares has a dedicated team of investment professionals with experience in managing leveraged and inverse ETFs, requiring specific expertise in derivatives and managing daily rebalancing.

Goal

The investment goal of UBR is to achieve two times the daily performance of the MSCI Brazil 25/50 Index.

Investment Approach and Strategy

Strategy: UBR employs a leveraged strategy, using derivatives such as swaps, futures contracts, and options, to magnify the daily returns of the MSCI Brazil 25/50 Index.

Composition The ETF's assets consist primarily of financial instruments, specifically derivatives, designed to create the leveraged exposure. It also holds some cash and money market instruments.

Market Share: Data unavailable on UBR's specific market share in the broader leveraged emerging markets ETF segment, but it is a niche product.

Total Net Assets (AUM): 44000000

Key Competitors

• EWZ
• BRZU

Competitive Landscape

The competitive landscape consists of unleveraged ETFs like EWZ, which provides broad exposure to the Brazilian market. BRZU is a direct competitor, offering 2x leverage on the same index. UBR offers similar leveraged exposure, but the daily rebalancing and leverage introduce risks that might not suit all investors. EWZ is preferred for low-risk, long-term portfolios.

Historical Performance: Historical performance is highly volatile and dependent on the short-term performance of the MSCI Brazil 25/50 Index. Long-term performance can deviate significantly from 2x the index return due to compounding effects and daily rebalancing.

Benchmark Comparison: UBR's performance is designed to be 2x the daily performance of the MSCI Brazil 25/50 Index, but due to compounding, long-term performance may differ substantially.

Expense Ratio: 0.95

Average Trading Volume

UBR has a low average trading volume compared to non-leveraged ETFs, implying less liquid assets for quick trade executions.

Bid-Ask Spread

The bid-ask spread for UBR can be wider than more liquid ETFs, increasing the cost of trading, especially for larger positions.

Market Environment Factors

Economic conditions in Brazil, global commodity prices, and investor sentiment towards emerging markets significantly affect UBR's performance. Changes in Brazilian monetary policy and political stability are key drivers.

Growth Trajectory

UBR's growth trajectory is tied to investor appetite for leveraged exposure to Brazil. Changes in fund strategy are unlikely given its defined objective of 2x daily leverage.

Competitive Edge

UBR's competitive advantage is its leveraged exposure, appealing to investors seeking short-term gains based on their Brazilian market views. However, this leverage is a double-edged sword, as it amplifies both gains and losses. Its daily rebalancing ensures adherence to its 2x leverage goal, but this can erode long-term returns due to compounding effects. UBR is not designed for buy-and-hold investors.

Volatility

UBR is highly volatile due to its leveraged nature. It experiences significantly larger daily price swings than unleveraged Brazil ETFs.

Market Risk

UBR is subject to significant market risk due to its concentration in Brazilian equities and the leveraged exposure, amplifying potential losses from adverse market movements and currency fluctuations.

Ideal Investor Profile

The ideal investor for UBR is a sophisticated, risk-tolerant trader who understands the risks of leveraged ETFs and has a short-term outlook on the Brazilian market.

Market Risk

UBR is best suited for active traders who use it for short-term tactical positions and are able to closely monitor their investment. It is not suitable for long-term investors or passive index followers.

ProShares Ultra MSCI Brazil Capped (UBR) is a leveraged ETF designed for short-term trading of the MSCI Brazil 25/50 Index. It offers 2x daily exposure, making it highly volatile and risky. It is not suitable for long-term investment due to compounding effects and is best used by sophisticated investors with a strong understanding of leveraged products and the Brazilian market. High management costs make this ETF less favorable for long-term investors than other low-cost unleveraged ETFs.

Data Sources:

• ProShares Website
• ETF.com
• Bloomberg

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Investment decisions should be made based on your own research and risk tolerance. Past performance is not indicative of future results. Leveraged ETFs are not suitable for all investors.