ProShares, the largest purveyor of leveraged and inverse ETFs,
today rolled out a bull-and-bear pair of triple exposure equity
ETFs focused on the U.S. financial sector, going head-to-head
against a similar pair offered by Direxion Funds.
The ProShares UltraPro Financials ETF (NYSEArca:FINU) and the
ProShares UltraPro Short Financials ETF (NYSEArca:FINZ) offer a
play on both sides of the Dow Jones U.S. Financials Index through
strategies that are designed to serve up three times the daily
performance of the underlying index and its inverse.
The funds each cost 0.95 percent, which includes a fee waiver of
1.09 percent, according to the latest prospectus the company filed
with U.S. regulators. Direxion also charges 0.95 percent on its
Daily Financial Bull 3x Shares (NYSEArca:FAS) and Daily Financial
Bear 3x Shares (NYSEArca:FAZ). Both were launched in 2008.
Like Direxion's funds, the ProShares ETFs will invest in
everything from regional and major U.S.-based banks, to insurance
companies, real estate names, credit card issuers and even publicly
traded stock exchanges. Direxion's strategies are linked to the
Russell 1000 Financial Services Index.
It goes without saying that the financial sector has been
particularly volatile since the credit crisis of 2008 showed just
how vulnerable the banking system could be. Accessing the segment
via leveraged and inverse funds can be even more challenging for
the average investor. Such funds move quickly and, more to the
point, can deviate significantly from their indexes. Vigilance is
Still, funds like FINU and FINZ clearly have an interested
audience, especially among investors and traders who are looking to
hedge their positions in the short term. Direxion's success with
its funds speaks to that demand.
FAS has tagged on gains of more than 12.5 percent in the past
month alone, and has year-to-date returns of some 32 percent at a
time when the S&P 500 Index has returned about a fifth of that
amount. The fund now boasts more than $1.29 billion in assets.
Its counterpart tells a different tale. FAZ has shed 37 percent
in value year-to-date, and its assets are about half of its bullish
partner, at $613 million.
ProShares has more than $22 billion in assets tied to its
various ETFs, ranking as the sixth-largest ETF provider in the
U.S., according to data compiled by IndexUniverse.
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