ProShares, which calls itself the "Alternative ETF company," has decided to shut a total of 17 ETFs, or more than 11 percent of its 150-fund lineup—many of them leveraged and inverse strategies, according to a regulatory filing. None of the funds had gathered assets, meaning they were probably money losers for the Bethesda, Maryland-based firm.
The shuttering of so many leveraged and inverse funds does not, in any significant way, constitute a failure of the leveraged category of ETFs. Indeed, ProShares remains the biggest purveyor of such strategies, many of which are staples for sophisticated investors looking to hedge positions.
The double-exposure inverse ProShares UltraShort 20+ Year Treasury ETF (TBT), a fund with more than $3 billion in assets, is the ultimate example of this. It's based on the same index as the iShares 20+ Year Treasury Bond ETF (TLT | A-83), a more than $6 billion fund that is the ETF market's most popular vehicle for obtaining exposure to long-dated U.S. Treasurys. TBT itself is the world's biggest inverse ETF.
ProShares' decision to shutter the 17 funds in early January brings to 87 the industrywide number of ETF closures this year, topping last year's total of 73, according to data compiled by ETF.com. Analysts view the shutterings as normal to the extent that the ETF industry has become much more efficient in deciding which strategies are worth subsidizing before they become self-sufficient money makers.
The 17 funds ProShares is closing are as follows:
- ProShares Short 30 Year TIPS/TSY Spread (FINF)
- ProShares UltraPro 10 Year TIPS/TSY Spread (UINF)
- ProShares UltraPro Short 10 Year TIPS/TSY Spread (SINF)
- ProShares UltraShort Russell3000 (TWQ)
- ProShares UltraShort Russell1000 Value (SJF)
- ProShares UltraShort Russell1000 Growth (SFK)
- ProShares UltraShort Russell MidCap Value (SJL)
- ProShares UltraShort Russell MidCap Growth (SDK)
- ProShares UltraShort Russell2000 Value (SJH)
- ProShares UltraShort Russell2000 Growth (SKK)
- ProShares Ultra Russell3000 (UWC)
- ProShares Ultra Russell1000 Value (UVG)
- ProShares Ultra Russell1000 Growth (UKF)
- ProShares Ultra Russell MidCap Value (UVU)
- ProShares Ultra Russell MidCap Growth (UKW)
- ProShares Ultra Russell2000 Value (UVT)
- ProShares Ultra Russell2000 Growth (UKK)