ProShares Plans Geared Bank, Energy ETFs

March 05, 2012

ProShares plans triple-exposure ETFs focused on energy and financials.

ProShares, the largest purveyor of leveraged and inverse ETFs, filed paperwork to bring to market two bull-and-bear pairs of triple-exposure equity funds, one duo focused on financial stocks; the other focused on oil and natural gas firms.

The funds the company put into registration are:

  • ProShares UltraPro Financials ETF
  • ProShares UltraPro Short Financials ETF
  • ProShares UltraPro Oil & Gas ETF
  • ProShares UltraPro Short Oil & Gas ETF

 

Both pairs of funds cover industries that have been especially volatile in the past year. Crude oil has been rising steadily in recent months amid ongoing demand growth from the developing world and, more recently, concern over possible conflict with Iran. Also, banks were at the center of the economic turmoil of the past few years, and remain volatile. Last year Bank of America, for example, had lost almost half its value by August. But in the past month, many financial stocks have been trading above their book value, according to the New York Times.

The company stressed in the registration statement that the funds are designed for sophisticated investors who understand that because the triple-exposure ETFs rebalance daily, their returns over time can differ significantly from those of their indexes, particularly in trendless and volatile markets.

The filing didn’t include tickers or expense ratios, though ProShares' geared funds typically have a 0.95 percent annual expense ratio.

Finance ETFs

The two financial stock ETFs enable investors to play both sides of the Dow Jones U.S. Financials Index. This index includes a wide variety of companies with capitalizations ranging between $138.3 million and $560.1 million. The index consists of the following types of companies:

  • Regional banks
  • Major U.S.-domiciled international banks
  • Full line, life, and property and casualty insurance companies
  • Companies that invest, directly or indirectly, in real estate
  • Diversified financial companies such as Fannie Mae, credit card issuers, check cashing companies, mortgage lenders and investment advisors
  • Securities brokers and dealers including investment banks, merchant banks and online brokers; and publicly traded stock exchanges

 

Oil & Gas ETFs

The two oil & gas ETFs, the UltraPro Oil & Gas ETF and the UltraPro Short Oil & Gas ETF, track the Dow Jones U.S. Oil and Gas Index, which tracks companies with capitalization of between $408.7 million and $563.9 billion.

The index includes oil & gas companies involved in exploration and production, integrated oil &gas, oil equipment and services, pipelines, renewable energy equipment companies and alternative fuel producers.

 

 

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