Gain Inverse Exposure to the Market with this ProShares ETF

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

The ProShares Short S&P500 (SH) provides inverse exposure to the market-cap-weighted index of 500 large- and mid-cap U.S. firms selected by the S&P Index Committee.

SH offers a bet against the S&P 500 and provides the liquidity required to allow investors to do so. The fund, similarly to most leveraged and inverse products, is designed to deliver moves in the opposite direction of its underlying index.

This fund is intended to be held for a relatively short time, and it works best, of course, during periods when the S&P 500 Index is declining. SH is large and liquid — which is vital for a tactical tool. The fee is high, but trading costs are more important, as the fund is not designed to be held for long.

Launched on June 19, 2006, the fund has been around for more than 13 years. It has $2 billion in assets under management, with a 1.63% distribution yield and an average (60-day) spread of 0.04%. Its expense ratio is 0.89%, which means it is generally more expensive to hold in relation to other exchange-traded funds.

Source: www.StockCharts.com 

SH seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the performance of the S&P 500. Due to the compounding of daily returns, performance over periods other than one day likely will differ in amount and possibly direction from the target return for the same period.

These effects may be more pronounced in funds with larger or inverse multiples and in funds with volatile benchmarks. Investors should monitor their holdings frequently. For more on the fund’s risks, please read the prospectus

And remember, you always should conduct your own due diligence in deciding whether this fund fits your individual investing goals and portfolio.

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.

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