Short ProShares

About ProShares | About the Advisor | Short ProShares

 

Q: What are Short ProShares?
A: They are the first exchange traded funds (ETFs) specifically designed to go up when markets go down. Short ProShares are built to move in the opposite direction of the markets.

Here’s how they work: if the S&P 500® Index drops 1% in a day, ProShares Short S&P500® should gain 1% that day (before fees and expenses). UltraShort ProShares double the effect. ProShares UltraShort S&P500® should gain 2% (before fees and expenses) if the index slips 1% in a day.

On the flip side, Short ProShares will lose value if markets rise. If the S&P 500 gains 1% in a day, ProShares Short S&P500 should lose 1%, and ProShares UltraShort S&P500 should lose 2% (again, before fees and expenses). Short ProShares and UltraShort ProShares make it simple for you to execute sophisticated strategies designed to manage risk or enhance return potential.

Q: How are Short ProShares different from short selling?
A: Short selling a stock or ETF requires a margin account. Short ProShares don’t. They allow you to get short exposure without the hassles–or expense–of a margin account. It’s as simple as buying a stock.

Short ProShares Can Help You Avoid the Hassles of Margin

 


 

Can you:

Shorting
on margin

Shorting
with ProShares
Lose more than you invest?

Yes

No
Face margin calls?

Yes

No
Track performance throughout the day?

No

Yes
Use in retirement accounts, such as IRAs?

No

Yes
Have gains possibly qualify for long-term capital gains tax treatment?

No

Yes
Be forced to sell assets in your brokerage account(s) to meet margin requirements?

Yes

No
Face increased margin requirements, without warning?

Yes

No
Find that your broker sold assets in your brokerage account(s), without warning, to meet margin requirements?

Yes

No
Find that your broker purchased securities in your account, without warning, to cover a short position?

Yes

No

Q: Who might benefit from using Short ProShares?
A: Short ProShares may help savvy investors who want to employ sophisticated strategies, such as hedging against market declines or seeking profit from overvalued markets, but don’t want to deal with the hassles—or expense—of a margin account. Even if you’re an old hand at short selling, Short ProShares may provide you with an easier way to get short exposure, without the need for a margin account.

Q: How can I use Short ProShares in my portfolio?
A: Short ProShares make it simple for sophisticated investors to try to hedge against downturns or seek profit when markets fall.

Hedge against declines. Let's say you believe in the long-term prospects of your small-cap investment but think the small-cap market is temporarily overvalued. Instead of selling your holdings (which may involve tax consequences and transaction costs), you may want to create a hedge to attempt to protect your small-cap investment in the short term.

Short ProShares allow you to create the hedge as simply as buying a stock. There’s no need for a margin account. So, if your small-cap investment has a strong correlation to the Russell 2000® Index, you could buy ProShares Short Russell2000, which is designed to move in the opposite direction of the Russell 2000. ProShares UltraShort Russell2000 would allow you to increase your hedge's exposure with no additional investment. If the Russell 2000 declines, your hedge should help offset losses in your small-cap investment.

Note that if the Russell 2000 rises while you hold your ProShares position, your hedge will actually result in a loss. UltraShort ProShares may require you to make adjustments to your holdings to maintain a specific short exposure. Also, remember that ProShares have fees, expenses and tax consequences of their own.

Seek profit from downturns. Short ProShares provide a simple way to try to seek profit from a market segment that you think is poised to fall. For example, if you think Chinese stocks are due for a pullback, you could try to take advantage of it by purchasing ProShares UltraShort FTSE/Xinhua 25 China.

Q: What market segments can I access with Short ProShares?
A: Short ProShares are designed to provide short exposure to a variety of market indexes or benchmarks as broad as the S&P 500 or as narrow as the FTSE/Xinhua China 25. Within this wide range of choices, ProShares offer short exposure to style, sector and international market indexes, as well as fixed-income and alternative asset classes: 

  • Short MarketCap ProShares cover six broad market indexes like the NASDAQ-100®, S&P 500 and Dow Jones Industrial Average™.
  • Short Style ProShares provide short exposure to six Russell value and growth indexes, in large-, mid- and small-cap flavors.
  • Short Sector ProShares focus on 12 narrow slices of the market, including real estate, health care, financials and oil and gas.
  • Short International ProShares branch out to four foreign market indexes, including MSCI EAFE, MSCI Emerging Markets and single countries, such as China.
  • Short Fixed-Income ProShares offer short exposure to intermediate and long-term U.S. Treasurys.
  • Short Commodity ProShares provide short exposure to a broad basket of commodities and oil, gold, and silver.
  • Short Currency ProShares offers short exposure to the euro and the yen.

View the full lineup of Short ProShares now.

All investing involves risk, including the possible loss of principal. These ETFs are designed to meet daily objectives; results over longer periods may differ. There is no guarantee that any ProShares ETF will achieve its investment objective. Short ProShares should lose value when their market indexes rise—a result that is opposite from traditional ETFs—and they entail certain risks, including, in some or all cases, aggressive investment techniques, inverse correlation, and market price variance risks, all of which can increase volatility and decrease performance. ProShares are not diversified investments. Investments in smaller companies and narrowly focused investments, including single country funds, typically exhibit higher volatility. International investments may also involve risk from unfavorable fluctuation in currency values, differences in generally accepted accounting principles and economic or political instability. In emerging markets, all these risks are heightened, and lower trading volumes may occur. Please see the prospectus for a more complete description of these risks.

Commodity and Currency ProShares invest substantially in financial instruments linked to the performance of commodities and currencies, such as swap agreements, forward contracts, and futures and options contracts, which may be subject to greater volatility than investments in traditional securities. Certain of these financial instruments will also subject the Funds to counterparty risk and credit risk, which could result in significant losses for the Funds. These ETFs may not be suitable for all investors and involve substantial risk, including loss of principal.

Commodity and Currency ProShares are not investment companies registered under the Investment Company Act of 1940. Please read the prospectus carefully before investing.

ProShares Trust II is a commodity pool as defined in the Commodity Exchange Act and the applicable regulations of the CFTC. ProShare Capital Management LLC is the Trust Sponsor, commodity pool operator (CPO) and commodity trading advisor. The Sponsor is registered as a CPO and commodity trading advisor with the CFTC, and is a member of the NFA. Commodity and Currency ProShares ETFs and ProShares Trust II are not investment companies registered under the Investment Company Act of 1940.

Shares of these ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.

Carefully consider the investment objectives, risks, and charges and expenses of ProShares before investing. This and other information can be found in their prospectuses. Read the prospectus carefully before investing. Obtain a ProShares prospectus for commodity or currency ETFs and for all other ETFs, and seek advice from your financial adviser or broker/dealer representative. Commodity and currency ETF information must be accompanied by a prospectus.

"NASDAQ-100®" is a trademark of The Nasdaq OMX Group, Inc. "S&P 500®" Index is a trademark of The McGraw-Hill Companies, Inc. "Dow Jones Industrial AverageSM" is a service mark of Dow Jones & Company, Inc. The Russell 2000® Index, Russell 2000® Growth Index, Russell 2000® Value Index, Russell 1000® Growth Index, Russell 1000® Value Index, Russell Midcap® Growth Index, and Russell Midcap® Value Index are trademarks of the Russell Investment Group. MSCI, MSCI Inc., MSCI Index, and EAFE are service marks of MSCI. FTSE/Xinhua China 25 is a trademark of FTSE/Xinhua Index Limited ("FXI"). All have been licensed for use by ProShares. "FTSE®" is a trademark of the London Stock Exchange PLC and The Financial Times Limited and is used by FXI under license. "Xinhua®" is a trademark of Xinhua Finance Limited and is used by FXI under license. ProShares have not been passed on by these entities or their affiliates as to their legality or suitability. ProShares are not sponsored, endorsed, sold or promoted by these entities or their affiliates, and they make no representation regarding the advisability of investing in these products. THESE ENTITIES AND THEIR AFFILIATES MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO PROSHARES.