Rydex Launches Leveraged, Short ETFs for Three Indexes

Rydex Investments expanded its lineup of exchange-traded ETFs today with the introduction of a family of leveraged and inverse products on the American Stock Exchange, and the launch may be the first shot fired in what could shape up to be a battle with ProShares for investor assets.

Although the firm offers several leveraged and inverse mutual funds, before today Rydex's ExpressShares ETFs had included mainly funds tracking S&P's "Pure Style" indexes and equal-weighted versions of the S&P 500 and its sector indexes. The new funds track three indexes: the S&P 500, the S&P MidCap 400 and the Russell 2000. Each index is tied to two funds - one targeting 200% of the returns of the index and another targeting 200% of the inverse (or -200%) of the index's returns.

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ProShares already offers funds with essentially the same strategy and tracking the same indexes, but the Rydex funds may attract quite a bit of attention since they are 25 basis points cheaper. ProShares' 0.95% expense ratios have been among the most expensive in the ETF industry, but as the only ETF provider offering inverse returns on major market indexes, it has not had any real competition in that space. The expense ratio on the Rydex funds, however, is just 0.70%.

Although ProShares has a good head start, with more than 50 funds and roughly $9 billion in assets, a look at its current funds and the funds in registration for both ETF providers shows that Rydex is planning ETFs based on many of the same indexes that ProShares' existing ETFs track and that both firms are planning launches based on the same indexes and offering similar strategies. If ProShares maintains its expense ratios at 95 basis points, it could begin losing ground to Rydex as that firm launches more funds.

You can view the prospectus for the new Rydex funds here.

Written by Heather Bell

• More on Leveraged Market Cap ETFs
• More on Inverse (Short) Market Cap ETFs

Comments

[floridadon:]

As someone new to trading ETF's and ETN's a comparison chart showing the symbols for ProShares and Rydex would be welcome.
Thanks

2007 Nov 08 02:50 PM