ProShares, the world's biggest purveyor of so-called geared
exchange-traded funds, launched a pair of ETFs focused on the U.S.
regional banking sector, the first of their kind for investors.
The Ultra KBW Regional Banking ETF (NYSEArca:KRU) gives
investors twice the daily exposure of the KBW Regional Banking
Index. The Short KBW Regional Banking ETF (NYSEArca:KRS)
is designed for investors to post daily profits equal to the daily
declines of the index.
While these ETFs are the first to give investors access to
leveraged strategies in the regional banking subsector, they are
not the first to tap into that space. The nearly four-year-old SPDR
KBW Regional Banking ETF (NYSEArca:KRE) has just under $1 billion
in assets. In 2009, the fund fell almost 22 percent, but has risen
29 percent so far this year.
The new ETFs join a ProShares lineup of almost 100 inverse and
leveraged ETFs, the largest one of which is the ProShares
UltraShort 20+ Year Treasury ETF (NYSEArca:TBT). That's the single
largest leveraged and inverse fund, with about $4.81 billion in
assets as of this week. Leveraged and inverse funds are designed
for more hands-on, risk-tolerant investors, as long-term returns
can vary widely from daily objectives.
The firm is fending off a growing number of lawsuits from
investors who are charging that the company didn't make clear how
its leveraged and inverse funds work. The company has said the
claims were without merit and that each fund's prospectus discloses
investment objectives and material risk.
"We intend to vigorously defend ourselves in all these
lawsuits," Bethesda, Md.-based ProShares said in a prepared
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