ProShares has become the fastest-growing company in the ETF space by offering leveraged, short and inverse-leveraged ETFs covering the domestic equity market. The funds are designed to deliver 200%, -100% and -200% of the average daily return of a benchmark index; if, for instance, the S&P 500 goes up 1%, the related inverse-leveraged ETF should go down 2%.
Now, the company is looking to extend its empire to commodities and currencies. The company recently filed papers with the Securities and Exchange Commission [SEC] for the right to launch 48 new ETFs tied to those alternative asset markets.
The commodity funds will be linked to the Dow Jones-AIG Commodity Index and related subindexes, and will provide leveraged, short and inverse-short exposure to the following markets:
- Dow Jones-AIG Commodity Index
- Dow Jones-AIG Precious Metals Index
- Dow Jones-AIG Industrial Metals Index
- Dow Jones-AIG Agriculture Index
- Natural Gas
The commodity index funds track the price of the "excess return" indexes, which track the price of rolling futures positions in the relevant commodities. These indexes include any and all "roll yield" from the position, so these funds will be subject to contango and backwardation.
The gold and silver funds, in contrast, will be tied to the price of physical gold bullion.
The oil and natural gas funds track the price of the near-term futures contract for the relevant commodity, but do not include the roll yield.
In the currency market, ProShares has targeted the following commodities:
- Australian Dollar
- British Pound
- Canadian Dollar
- Japanese Yen
- Mexican Peso
- Swedish Krona
- Swiss Franc
If that list of commodities looks familiar, it should: It's the same list covered by the Rydex CurrencyShares family of ETFs.
There is no word yet on expenses or listing locations for the funds. Regardless, the new products are likely to be a hit when they come to market, as traders, investors and speculators alike have shown a keen interest in these markets.
Written by Matthew Hougan