5 min readBy Ron Koren ETF Insider
How does the EFO ETF work?
The EFO ETF is a specialized investment fund that focuses on a specific sector. This exchange-traded fund offers investors exposure to a range of companies in this sector.
The issuer of the EFO ETF, ProShare Advisors, employs a unique investment strategy designed to produce daily returns that align with the fund's investment objective. The ETF is closely tied to the MSCI Inc.-constructed Index, which covers approximately 85% of the free float-adjusted market capitalization in developed countries, excluding the U.S. and Canada. The fund primarily invests in a combination of financial instruments, including equity securities, derivatives, money market instruments, and depositary receipts, aiming to achieve leveraged returns (2x) to the daily performance of the Index. ProShare Advisors uses a mathematical approach and engages in daily rebalancing to maintain consistent exposure, making the EFO ETF suitable for investors seeking leveraged exposure to developed market countries' equity performance while fully understanding the associated risks.
Although the primary focus of the ProShares Ultra MSCI EAFE ETF (EFO) may not be on dividends, it still reflects the dividend distribution of the underlying MSCI EAFE Index. These distributions typically occur on a regular basis, influenced by the constituent companies' individual dividend policies and performances. EFO primarily seeks to provide leveraged exposure to the single-day returns of the MSCI EAFE Index, and its dividend eligibility and distribution depend on the underlying index's components' dividend actions. Investors should consider EFO primarily for its leveraged exposure to international equities rather than as a traditional income-focused investment.
Tracking the MSCI EAFE Index is the primary objective of the EFO ETF. This exchange-traded fund seeks to mirror the performance of the MSCI EAFE Index, which encompasses around 85% of the free float-adjusted market capitalization in developed countries, excluding the United States and Canada. EFO achieves this by investing in a combination of financial instruments, including equity securities of public companies, derivatives for leveraged returns, money market instruments, and depositary receipts such as ADRs and GDRs. ProShare Advisors employs a mathematical approach to maintain the fund's exposure consistent with the daily investment objective of replicating the MSCI EAFE Index's returns, regardless of market conditions. However, it's important to note that due to daily rebalancing and compounding effects, EFO's performance over extended periods may differ from two times (2x) the index's returns, and investors should consider the associated risks before investing in this ETF.
The correlation aspect of the ProShares Ultra MSCI EAFE ETF (EFO) primarily revolves around its objective to deliver daily returns that are double the daily performance of the MSCI EAFE Index, excluding the U.S. and Canada. Given its leveraged nature, EFO tends to exhibit a strong positive correlation with the MSCI EAFE Index on a daily basis. Investors who seek amplified exposure to international developed markets often use EFO for short-term trading strategies or hedging purposes. To gain deeper insights into EFO's correlation with its benchmark index and potential overlaps with other assets, ETF Insider's web app offers a powerful visualization tool and comprehensive data analysis for all US ETFs, assisting investors in making well-informed decisions.
The EFO ETF (Exchange Fund Options) is primarily involved in the financial instruments that ProShare Advisors believes will produce daily returns consistent with the fund's investment objective. The ETF tracks the MSCI EAFE Index, which covers approximately 85% of the free float-adjusted market capitalization in developed market countries, excluding the U.S. and Canada. It includes developed market country indexes such as Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. The EFO ETF invests in equity securities, derivatives, money market instruments, and depositary receipts, aiming to achieve leveraged returns that correspond to the daily performance of the Index. Investors should note that this ETF seeks to provide daily returns, and its performance over a longer period may significantly differ from two times (2x) the return of the Index due to daily rebalancing and compounding effects. The EFO ETF may concentrate its investments in industries, countries, or regions to a similar extent as the Index. As of May 31, 2022, the Index had a focus on the financials and industrials industry groups, as well as on Japan and the United Kingdom.
The exposure characteristics of the EFO ETF, or any ETF with no specific exposure information available, may vary widely across markets, regions, and sectors. Without specific exposure details, investors should exercise caution and conduct thorough research before considering this ETF as part of their investment strategy.
ETF Insider is a data-driven portfolio analytics and optimization platform that introduces a more efficient and practical way to visualize, analyze and optimize portfolios.
Rather than focusing on the surface-level attributes of ETFs and Mutual Funds, ETF Insider goes deeper by examining the underlying holdings of exchange traded products.
By organizing and structuring that data, investors can easily navigate within their overlapping layers.
This innovative perspective combined with modern data visualization and modeling tools, provides an entirely new approach to portfolio optimization that can quickly expose both portfolio inefficiencies and opportunities.
5 min readThe EFO ETF is a specialized investment fund that focuses on a specific sector. This exchange-traded fund offers investors exposure to a range of companies in this sector.
6 min readThe ETF with Ross Stores Inc. exposure provides investors with an opportunity to diversify their portfolio while gaining insight into the performance and potential of Ross Stores Inc.. This ETF offers a comprehensive view of the company's standing in the market, its historical performance, and future prospects.
5 min readThe DIVZ ETF is a specialized investment fund that focuses on a specific sector. This exchange-traded fund offers investors exposure to a range of companies in this sector.
ETF Insider is a novel portfolio optimization tool that uses the power of data visualization to gain insight into portfolio compositions, concentration risks, portfolio efficiency and more. Complex financial data can be transformed into visually appealing and easily digestible graphs and charts, allowing investors to quickly identify trends and make well-informed investment decisions. Not only does this save time, but it also increases the accuracy and effectiveness of portfolio management.
