Finally! We Get Some Leverage!

September 01, 2006

After nearly a half-decade in development, the SEC gave the go-ahead for 12 leveraged, short and short-leveraged exchange-traded funds (ETFs) from ProShares, the ETF arm of Pro Funds.

The new funds provide 2X long, 1X short and 2X short exposure to four major U.S. market indexes: the Dow Jones Industrial Average, Nasdaq-100, S&P MidCap 400 and S&P 500.

The new funds are the:

Dow Jones Industrial Average

•  Ultra Dow30 ProShares (DDM)
•  Short Dow30 ProShares (DOG)
•  UltraShort Dow30 ProShares (DXD)

Nasdaq-100 Index

•  Ultra QQQ ProShares (QLD)
•  Short QQQ ProShares (PSQ)
•  UltraShort QQQ ProShares (QID)

S&P MidCap 400 Index

•  Ultra MidCap 400 ProShares (MVV)
•  Short MidCap 400 ProShares (MYY)
•  UltraShort MidCap 400 ProShares (MZZ)

S&P 500 Index

•  Ultra S&P 500 ProShares (SSO)
•  Short S&P 500 ProShares (SH)
•  UltraShort S&P 500 ProShares (SDS)

The ETFs charge 95 basis points in annual expenses. By comparison, Pro Funds charges 1.44 percent for their open-end leveraged S&P 500 fund.

Pro Funds has huge expectations for these funds, and for good reason. In an i ronic twist for an index product, these ETFs could become the home for "hot money" on the market. They will also p rove useful for hedging, tax management and portable alpha strategies.

Speaking of leverage, Rydex Investments rolled out four new open-end (read: traditional) mutual funds, including the first-ever funds to offer leveraged (2X) long and short expos u re to the Russell 2000 Index.

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