5 min readBy Ron Koren ETF Insider
The Unseen Risks of Fund Overlap
Diversification has long been touted as the key to successful investing..
ProShares Trust, the issuer of the EFU (Inverse MSCI EAFE) ETF, employs a strategy focused on providing inverse leveraged exposure to the MSCI EAFE Index, which encompasses developed market countries excluding the U.S. and Canada. With holdings in financial instruments primarily composed of derivatives such as swap agreements, ProShares aims to achieve daily returns consistent with its Daily Target. Additionally, the fund may invest in money market instruments like U.S. Treasury Bills and repurchase agreements to manage cash balances associated with its derivative use. Utilizing a mathematical approach, ProShare Advisors dynamically adjusts the fund's investment positions to align with its objective, striving for full investment in financial instruments that offer inverse leveraged exposure regardless of market conditions. The fund aims to rebalance its portfolio daily to maintain consistency with the Daily Target, responding to movements in the underlying Index. This strategy allows investors to potentially benefit from inverse exposure to the MSCI EAFE Index's performance. For further information on investment objectives, strategies, and associated risks, investors are encouraged to refer to the Fund's Prospectus.
EFU Dividend, as an exchange-traded fund (ETF) issued by ProShares Trust, seeks to provide daily investment results that correspond to the inverse (-1x) of the daily performance of the Dow Jones U.S. Dividend 100 Index. This index comprises high dividend-paying U.S. equities. EFU Dividend achieves its objective by utilizing financial instruments such as derivatives, including swap agreements, to gain inverse exposure to the underlying index. Additionally, the fund may invest in money market instruments to manage cash balances associated with its derivative positions. ProShare Advisors employs a mathematical approach to dynamically adjust the fund's investment positions to ensure inverse exposure to the index's daily performance. EFU Dividend's strategy allows investors to potentially benefit from inverse movements in the Dow Jones U.S. Dividend 100 Index, making it a suitable option for those seeking to hedge against declines in dividend-paying U.S. equities. Investors are encouraged to review the Fund's Prospectus for detailed information on investment objectives, strategies, and associated risks.
EFU Tracking, an exchange-traded fund (ETF) issued by ProShares Trust, is designed to provide investors with daily inverse (-1x) exposure to the performance of the MSCI EAFE Index. This index represents developed market countries excluding the U.S. and Canada. EFU Tracking achieves its objective by investing in financial instruments, primarily derivatives like swap agreements, that offer inverse exposure to the underlying index. Additionally, the fund may utilize money market instruments to manage cash balances associated with its derivative positions. ProShare Advisors employs a mathematical approach to adjust the fund's investment positions dynamically, aiming to maintain consistent inverse exposure to the index's daily performance. EFU Tracking's strategy allows investors to potentially benefit from inverse movements in the MSCI EAFE Index, making it an attractive option for those seeking to hedge against declines in developed market equities outside of North America. Investors are encouraged to refer to the Fund's Prospectus for comprehensive details regarding investment objectives, strategies, and associated risks.
EFU Correlation, an exchange-traded fund (ETF) issued by ProShares Trust, is engineered to provide investors with daily inverse (-1x) correlation to the performance of a specific index or benchmark. This ETF utilizes a sophisticated strategy involving financial instruments like derivatives, including swap agreements, to achieve inverse correlation to the target index. The fund may also employ money market instruments to manage cash balances associated with its derivative positions. ProShare Advisors applies a mathematical methodology to dynamically adjust the fund's investment positions, aiming to sustain consistent inverse correlation with the target index's daily performance. EFU Correlation offers investors an opportunity to potentially profit from inverse movements in the selected index or benchmark, making it an appealing option for those seeking to hedge against declines in specific market sectors or asset classes. Investors are advised to review the Fund's Prospectus for detailed information on investment objectives, strategies, and associated risks.
EFU Sector, an exchange-traded fund (ETF) issued by ProShares Trust, is engineered to provide investors with daily inverse (-1x) exposure to the performance of a specific sector or industry index. This ETF employs a sophisticated strategy involving financial instruments such as derivatives, notably swap agreements, to achieve inverse correlation to the target sector or industry index. Additionally, EFU Sector may utilize money market instruments to manage cash balances associated with its derivative positions. ProShare Advisors employs a mathematical methodology to dynamically adjust the fund's investment positions, aiming to sustain consistent inverse exposure to the target sector or industry index's daily performance. EFU Sector presents investors with an opportunity to potentially benefit from inverse movements in the selected sector or industry, making it an attractive option for those looking to hedge against declines in specific market segments. Investors are encouraged to consult the Fund's Prospectus for comprehensive details on investment objectives, strategies, and associated risks.
EFU Exposure, an exchange-traded fund (ETF) issued by ProShares Trust, is tailored to provide investors with daily inverse (-1x) exposure to the performance of a particular asset class, market index, or investment strategy. This ETF implements a sophisticated investment approach leveraging financial instruments like derivatives, notably swap agreements, to attain inverse correlation with the target asset class, index, or strategy. Additionally, EFU Exposure may incorporate money market instruments to manage cash balances associated with its derivative positions. ProShare Advisors utilizes a mathematical methodology to dynamically adjust the fund's investment positions, aiming to sustain consistent inverse exposure to the target asset class, index, or strategy's daily performance. EFU Exposure offers investors an opportunity to potentially profit from inverse movements in the selected asset class, index, or strategy, making it a compelling option for those seeking to hedge against declines in specific market areas or investment strategies. Investors are advised to review the Fund's Prospectus for comprehensive details on investment objectives, strategies, and associated risks.
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