UWM Profile
The ProShares Ultra Russell2000 ETF is designed to offer investors leveraged exposure to the Russell 2000 Index, which represents approximately 2,000 of the smallest companies in the U.S. stock market. The fund aims to deliver twice the daily performance of the Russell 2000 Index by investing in a mix of financial instruments that ProShare Advisors believes will achieve this goal. This typically includes a combination of equity securities, futures contracts, and other derivatives that are used to replicate the index's movements on a daily basis.
The Russell 2000 Index is a float-adjusted, market capitalization-weighted index that includes about 10% of the total market capitalization of the Russell 3000 Index. This index is a key benchmark for small-cap stocks, capturing the performance of smaller U.S. companies that are not included in larger-cap indices. The ProShares Ultra Russell2000 ETF focuses on this specific segment, providing investors with targeted exposure to small-cap growth opportunities and market segments that are distinct from large-cap stocks.
To achieve its leveraged exposure, the ProShares Ultra Russell2000 ETF uses financial instruments such as futures contracts, options, and swap agreements. The fund's strategy aims to provide twice the daily return of the Russell 2000 Index. This leveraged approach can result in significant fluctuations in the fund's performance, particularly over longer periods, due to the effects of daily compounding. As such, the ETF is intended for short-term trading and is not suitable for long-term holding due to the potential for performance deviations over time.
The fund is classified as non-diversified, meaning it invests a substantial portion of its assets in a specific segment of the market represented by the Russell 2000 Index. This concentration can lead to higher volatility and risk compared to more diversified investment vehicles. Investors should be aware of the increased risk associated with leveraged and non-diversified investments and should carefully consider their risk tolerance and investment strategy when using this ETF.
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