ProShares, the ETF firm known largely for its inverse and leveraged strategies, pushed further into other realms of the fund market by filing regulatory paperwork detailing a globally focused ETF that will own companies that develop and provide basic infrastructure.
The ProShares Global Direct Infrastructure ETF will be based on an LPX GmbH index consisting of 30 of the largest liquid, publicly listed companies from around the world. The prospectus said the constituent companies would be in the following areas: toll roads/bridges; airports; ports; pipeline networks—such as water, gas and oil; communication networks; and electric power grids.
“LPX defines infrastructure as the basic physical assets of an economy that are required to provide essential services to its population and that enable the economic growth and development,” the prospectus dated Jan. 8, 2012 said.
Infrastructure has proven to be a popular theme in investment markets in recent years, in large part because of the rapid development in emerging markets such as China, Brazil and India. Additionally, many developed countries—notably the United States—have a pressing need to update old infrastructure, which is likely to keep companies in the sector quite busy for a long time.
This ETF would expand on what’s a relatively new trend for ProShares to branch out from its core franchise of leveraged and inverse funds—roughly 90 percent of the company’s ETF offerings are geared products. The Bethesda, Md.-based fund provider had more than $21 billion tied to some 139 ETFs as of Tuesday, Jan. 8, according to IndexUniverse’s latest daily ETF League Table.
LPX further defines basic infrastructure facilities as those that embody the following characteristics: physical, constructible objects; long life; high initial investment cost; low technology risk; low operating costs; inelastic demand; and high barriers of market entry. Such characteristics create what LPX refers to as a “natural monopoly.”
ProShares, which said the fund will use LPX’s NMX 30 Infrastructure Global Index, didn’t detail either an annual expense ratio or a ticker symbol.
Investors have fewer—but better—choices.
Sometimes what’s behind a very high dividend yield is truly surprising.
For VIX-related ETFs to work as that ‘magical’ hedge, you have to time the market. Good luck with that.
But this new product is different than other euro-hedged funds.