On Wednesday, ProShares launched the ProShares Ultra S&P 500 Equal Weight ETF (URSP), the latest fund to join its growing collection.
Following a waiver, URSP operates with a net expense ratio of 95 basis points. The fund’s objective is to provide daily results that equate to 2x the daily performance of the S&P 500 Equal Weight Index.
True to its name, this index looks to provide even exposure to each of the companies within the S&P 500. This marks a stark contrast to traditional cap-weight approaches, which would overweight mega-cap tech giants like Nvidia and Meta.
Fostering Leveraged Exposure
In order to attain leveraged exposure to the index, URSP will invest in a mix of derivatives and equity securities. The fund applies a mathematical approach to calculate the investment positions that can best replicate the daily results of the reference index. Meanwhile, the remaining cash balance for the fund will likely be held in short-term money market instruments.
Due to its focus on pursuing daily results, URSP’s portfolio team expects the portfolio to be rebalanced on a daily basis. As such, investors in the fund should thus expect its weightings to ebb and flow based on how the index is doing.
URSP comes online at an interesting junction within the large-cap market. The long-term U.S. economy remains relatively uncertain, and doubts still remain about overconcentration within the S&P 500. As such, taking a leveraged approach with an equal weight large cap index may prove to be a fortuitous path going forward.
“Leveraged and inverse ETFs have garnered a lot of attention this year as investors embrace ETFs for their ease of use,” said Todd Rosenbluth, head of research at VettaFi. “ProShares has been a long time leader in this ETF space and continues to bring innovative, diversified strategies to market.”
With an extensive library of compelling ETF strategies, ProShares has a number of funds that have attracted significant investor interest. One of the largest ProShares funds, the ProShares S&P 500 Dividend Aristocrats ETF (NOBL ), has over $11 billion in assets under management.
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