ProShares Launches Regional Bank ETFs

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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 statement.

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Copyright ® 2010 Index Publications LLC . All Rights Reserved.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs

Referenced Stocks: KRE , TBT

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