SMN Profile
The ProShares UltraShort Basic Materials fund aims to deliver returns that are inversely correlated with the performance of U.S. companies in the basic materials sector, leveraging a strategic approach to achieve its investment objectives. The fund invests in a range of financial instruments, including derivatives such as swap agreements, futures contracts, and options, which are specifically selected to produce returns that are typically twice the inverse of the daily performance of the basic materials sector index. This approach is designed to benefit from declines in the sector's performance, providing investors with a hedge against potential downturns in basic materials markets.
The underlying index tracked by the fund measures the stock performance of U.S. companies engaged in the production and distribution of basic materials, including metals, chemicals, and forestry products. By focusing on this sector, the fund provides targeted exposure to the fluctuations in the basic materials industry, which can be influenced by factors such as commodity prices, economic cycles, and supply-demand dynamics. The fund's investment strategy is highly specialized, catering to investors looking to capitalize on or protect against sector-specific movements.
The fund's portfolio consists primarily of financial instruments that ProShare Advisors selects based on their ability to achieve the fund's objective of delivering inverse leveraged returns. This often involves using sophisticated financial products to achieve a high degree of precision in tracking the inverse performance of the underlying index. As a result, the fund is structured to deliver returns that are highly responsive to daily changes in the basic materials sector, making it a tool for investors with specific short-term market views.
Given its specialized focus and use of leverage, the ProShares UltraShort Basic Materials fund is non-diversified, meaning it does not spread investments across a broad array of asset classes. Instead, it concentrates its holdings in instruments related to the basic materials sector, which can lead to increased risk and volatility. Investors considering this fund should be aware of its potential for significant gains or losses, depending on the performance of the underlying sector, and ensure it aligns with their investment goals and risk tolerance.
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