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The New "Big Short" Just Got Bigger And Easier

|Includes: BPR, CBL, PEI, Simon Property Group, Inc. (SPG), WPG
Summary

An encouraging sign for the retail REIT sector - ETFs designed to bet against it - levered!

Should these get traction, volatility in the names could increase.

Note that they state they are meant to be one day returns.

Once an idea (or thesis, narrative etc) has caught on and shown itself to have some traction, you can always count on financial products coming out to help folks bet on the trade.  Key word is bet.  Leveraged thematic ETFs are a bet.  This isn't to say that they are bad, just calling it what it is.  A long/short hedge fund in a retail book - but without the control over the issues being played.

The newest entrants are from the folks at Proshares.  They have created three new ETFs which will allow folks to be long clicks, short bricks.

They are:

  • Long Online Short Bricks & Mortar Retail ETF
  • UltraShort Bricks and Mortar Retail
  • UltraPro Short Bricks and Mortar Retail

Prospectus here

  • ProShares Long Online Short Bricks & Mortar Retail ETF (the “Fund”) seeks investment results, before fees and expenses, that track the performance of the Online vs Bricks and Mortar Retail Long/Short Index (the “Index”).Positions selected for the short portion of the Index will be selected from the 100 largest U.S. retailers who have a free float market capitalization of at least $500 million USD. Positions selected for the long portion of the Index may include both U.S. and foreign domiciled online or virtual retailers/marketplaces who have a significant U.S. presence and who have a free float market capitalization of at least $300 million USD. All constituents must have an average daily trading volume in the last three months of at least $1 million USD as of each semi-annual reconstitution date.
  • ProShares UltraShort Bricks and Mortar Retail (the “Fund”) seeks investment results for a single day only, not for longer periods. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from two times the inverse (-2x) of the return of the Bricks and Mortar Retail Index (the “Index”) for that period. For periods longer than a single day, the Fund will lose money when the level of the Index is flat, and it is possible that the Fund will lose money even if the level of the Index falls. Longer holding periods, higher index volatility, inverse exposure and greater leverage each exacerbate the impact of compounding on an investor’s returns. During periods of higher Index volatility, the volatility of the Index may affect the Fund’s return as much as or more than the return of the Index. The Fund invests in derivatives that ProShare Advisors believes, in combination, should have similar daily return characteristics as two times the inverse (-2x) of the daily return of the Index. The Index consists of certain of the 100 largest U.S. retailers that may be most threatened by the continuing trend to online retailing.
  • ProShares UltraPro Short Bricks and Mortar Retail (the “Fund”) seeks investment results for a single day only, not for longer periods. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from three times the inverse (-3x) of the return of the Bricks and Mortar Retail Index (the “Index”) for that period. For periods longer than a single day, the Fund will lose money when the level of the Index is flat, and it is possible that the Fund will lose money even if the level of the Index falls. Longer holding periods, higher index volatility, inverse exposure and greater leverage each exacerbate the impact of compounding on an investor’s returns. During periods of higher Index volatility, the volatility of the Index may affect the Fund’s return as much as or more than the return of the Index.

Disclosure: I am/we are long PEI, CBL, SKT, WPG.

Additional disclosure: I am LONG bricks