ProShares UltraPro Russell2000 (URTY)

Overview

The ProShares UltraPro Russell2000 (URTY) is a leveraged ETF that seeks to deliver three times (3x) the daily performance of the Russell 2000 Index, which tracks small-cap U.S. companies. It is designed for aggressive investors seeking amplified short-term gains through leveraged exposure to small-cap stocks.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs, with a solid track record of providing products that meet their stated objectives, but leveraged ETFs are complex and not suited for all investors.

Management Expertise

ProShares has a dedicated team of investment professionals with expertise in managing leveraged and inverse ETFs, requiring sophisticated risk management and trading strategies.

Goal

The primary investment goal of URTY is to provide three times the daily investment results of the Russell 2000 Index.

Investment Approach and Strategy

Strategy: URTY aims to provide leveraged exposure to the Russell 2000 Index using a combination of financial instruments such as swaps, futures contracts, and options.

Composition URTY does not directly hold stocks; instead, it utilizes derivatives to achieve its 3x leveraged exposure to the Russell 2000. The underlying holdings are largely swaps, futures, and cash.

Market Share: The market share of URTY among leveraged small-cap ETFs is significant, but varies depending on overall trading volume and market sentiment.

Total Net Assets (AUM): 677100000

Key Competitors

• Direxion Daily Small Cap Bull 3X Shares (TNA)
• MicroSectors U.S. Small Cap 3X Leveraged ETN (TNAZ)

Competitive Landscape

The competitive landscape is characterized by a few key players offering leveraged exposure to small-cap stocks. URTY is a well-established fund with high AUM, offering ample liquidity, but high leverage makes it inherently riskier. Competitors may differ slightly in their leverage ratios or expense ratios, but all share similar risk profiles and short-term trading focus.

Historical Performance: Historical performance can be highly volatile due to the leveraged nature of the fund; performance is best measured over very short time horizons. Long-term performance is unlikely to match 3x the index return due to compounding effects.

Benchmark Comparison: Due to the daily reset, long-term performance diverges significantly from the 3x multiple of the Russell 2000. Daily performance aims for 3x, but is subject to tracking error and market volatility.

Expense Ratio: 0.95

Average Trading Volume

URTY exhibits high average trading volume, making it relatively easy to buy and sell shares quickly.

Bid-Ask Spread

The bid-ask spread is generally tight, reflecting the ETF's high liquidity and active trading.

Market Environment Factors

URTY's performance is highly sensitive to movements in the Russell 2000 index, influenced by economic growth, interest rates, and investor sentiment towards small-cap stocks.

Growth Trajectory

URTY's growth trajectory is tied to investor demand for leveraged exposure and the overall performance of the Russell 2000. Strategy remains consistent but holdings fluctuate daily to maintain leverage.

Competitive Edge

ProShares UltraPro Russell2000's competitive edge lies in its established presence and high AUM, which provides ample liquidity and tighter bid-ask spreads. Its sole focus is providing a 3x leveraged exposure to the Russell 2000. Its robust trading volume supports efficient trading. This makes it attractive to active traders seeking to capitalize on short-term market movements. Its proven ability to maintain its leverage target also differentiates it.

Volatility

URTY exhibits extremely high volatility due to its 3x leverage, making it unsuitable for risk-averse investors.

Market Risk

The primary market risk stems from the underlying Russell 2000 index and the potential for magnified losses due to leverage. Compounding and volatility decay can significantly erode returns over longer periods.

Ideal Investor Profile

The ideal investor for URTY is a sophisticated, active trader with a high-risk tolerance who seeks short-term gains and understands the risks associated with leveraged ETFs.

Market Risk

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

ProShares UltraPro Russell2000 (URTY) is a leveraged ETF designed for short-term active traders seeking amplified exposure to the Russell 2000 index. Its 3x leverage enhances potential gains but also magnifies potential losses, making it a highly risky investment. Due to its daily reset mechanism, it is not suitable for long-term investment strategies. Its liquidity and tight bid-ask spreads make it attractive for short-term tactical trading. Investors should carefully consider their risk tolerance and investment horizon before investing in URTY.

Data Sources:

• ProShares website
• Bloomberg
• Morningstar

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Leveraged ETFs are complex financial instruments and involve significant risks. Past performance is not indicative of future results.