Exchange Traded Funds (ETFs)

Gain Inverse Exposure to the S&P 500 with This ETF

The ProShares UltraPro Short S&P500 (SPXU) seeks daily investment results, before fees and expenses, that correspond to three times the inverse (-3x) of the daily performance of the S&P 500.

SPXU allows investors to bet against the S&P 500, ratcheting up the leverage to provide 3x inverse exposure to the widely followed index. Due to the effects of compounding, the fund is not designed to be held for an extended period of time. These effects may be more pronounced in funds with larger or inverse multiples and in funds with greater volatility.

The fund typically enjoys very strong liquidity, which is paramount for a product of this nature. Investors should monitor their holdings frequently, and consult the prospectus for further details on the calculation of the returns and the risks associated with investing in this product.

Chart Courtesy of StockCharts.com

The ETF has almost $700 million in assets under management, a 0.05% spread and a 0.91% expense ratio, meaning it is more expensive to hold relative to other exchange-traded funds. It currently trades at just over $28 a share and has a 1.69% yield. Its next distribution date is March 25.

ProShares UltraPro Short S&P500 has an MSCI ESG Fund Rating of A based on a score of 6.58 out of 10. The MSCI ESG Fund Rating measures the resiliency of portfolios to long-term risks and opportunities arising from environmental, social, and governance factors. ESG Fund Ratings range from best (AAA) to worst (CCC).

To sum up, SPXU provides (-3x) exposure to a market-cap weighted index of 500 of the largest and most liquid U.S. companies. However, I urge interested investors to, as with any investment, conduct their own due diligence in deciding whether this fund is right for their individual portfolio needs and goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.