Daily ETF Watch: CDS ProShares Launch

Long-awaited products are first of their kind.

Reviewed by: Heather Bell
Edited by: Heather Bell

Long-awaited products are first of their kind.

On Thursday, ProShares launched two long-awaited ETFs that are the first exchange-traded products to offer exposure to the credit default swap market, according to an announcement by BATS Global Markets.

The ProShares CDS North American HY Credit ETF (TYTE) and the ProShares CDS Short North American HY Credit ETF (WYDE) both listed on the BATS exchange.

The funds are actively managed and offer exposure to a basket of index-based credit default swaps. WYDE and TYTE provide long and short exposure, respectively.

A credit default swap is basically insurance for loan issuers: The buyer of the swap—often the issuer of the loan, but not always—is protected if the borrower defaults on the loan. Many believe the CDS market is a good way to track credit risk in the market, especially the risk associated with individual borrowers.

ProShares first put the funds into registration several years ago. The firm has three additional long/short pairs of CDS funds waiting to be launched, including a pair covering investment-grade U.S. credit default swaps and two more pairs targeting high-yield and investment-grade CDS in Europe.

WYDE and TYTE each come with an expense ratio of 0.50 percent.


Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.