By Patrick Watson
Four new ETFS from ProShares hit the tape today, offering +200% daily leveraged exposure to four MSCI indexes covering Brazil, Mexico, Pacific ex-Japan, and Europe. All these benchmarks, or similar ones, are already accessible in unleveraged fashion through other ETFs. ProShares obviously thinks there is demand for more aggressive ways to trade them. (News release)
The new ETFs are:
- ProShares Ultra MSCI Brazil (UBR) (overview page)
- ProShares Ultra MSCI Europe (UPV) (overview page)
- ProShares Ultra MSCI Mexico Investable Market (UMX) (overview page)
- ProShares Ultra MSCI Pacific Ex-Japan (UXJ) (overview page)
ProShares previously launched 2x inverse ETFs covering all these indexes, so now they have the long side covered as well. Other firms, notably Direxion, have tended to launch long and inverse funds in matched pairs at the same time. ProShares seems to be taking a different approach lately.
With these ETFs we are seeing the further development of a new phenomenon in ETF product development. You might call it “Index Slicing.” We see multiple exchange-traded products designed to track the same indexes in various directions and magnifications. If your interest is in the MSCI Brazil Index, for example, you can buy an unleveraged long ETF with iShares MSCI Brazil (EWZ), or you can go 200% short via ProShares UltraShort MSCI Brazil (BZQ), or you can have a 200% long position with today’s introduction of UBR.
Carried a little further, the ETF product selection may start to resemble the “option chain” quote that is familiar to active traders, with puts and calls at various strike prices on the same underlying asset. I suppose it’s always nice to have alternatives, but I wonder at what point it will all become too complicated for non-professional investors.
Today’s batch of new ProShares all carry a 0.95% expense ratio. More information can be found at the ProShares site through the links above.
Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.