What is the FUT ETF?
5 min read
By Ron Koren, ETF Insider

What is the FUT ETF?

When it comes to investing in today's complex financial landscape, understanding various investment options is crucial. Exchange-traded funds (ETFs) and other financial instruments have gained immense popularity among investors seeking diversification and potentially uncorrelated returns. In this article, we'll delve into the world of [ETF NAME], exploring its unique features, strategies, and how it can fit into your investment portfolio.

FUT ETF: Overview

FUT ETF is not your typical ETF. It's an actively managed exchange-traded fund that aims to deliver positive returns, even in markets where broad equities or fixed income might falter. This fund uses the S&P® Strategic Futures Index as a benchmark, striving to capture economic benefits from trends in physical commodities, interest rates, and currency markets. The key difference? It actively takes both long and short positions in related futures contracts, enabling it to profit from both upward and downward market movements.

FUT ETF: Navigating Futures Contracts

The core strategy of FUT ETF revolves around futures contracts. These contracts allow investors to speculate on the future value of an underlying asset, be it commodities, interest rates, or currencies. The fund's managers engage in long positions when they anticipate a positive price trend and short positions when they foresee a negative trend. This approach enables them to potentially profit from both bullish and bearish market scenarios.
One crucial tool in the fund's arsenal is the seven-month weighted moving average return. This metric helps determine whether a futures contract should be positioned as "long" or "short." A long position involves expecting the asset's value to rise over time, while a short position anticipates its value to decrease. This strategic positioning allows the fund to make the most of changing market dynamics.

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FUT ETF Subtopic 2: Portfolio Composition

In its pursuit of returns, FUT ETF primarily invests in a diversified portfolio of commodity futures contracts and currency and U.S. Treasury futures contracts. However, it doesn't stop there. The fund also holds cash or cash equivalents as collateral for these futures contracts. This approach provides both liquidity and stability to the portfolio.
Additionally, the fund doesn't directly invest in Commodity Futures Contracts. Instead, it gains exposure to these investments through its subsidiary, ProShares Cayman Portfolio I. This subsidiary shares the fund's investment objective and strategy, allowing for efficient exposure to commodity markets while maintaining compliance with relevant regulations.

FUT ETF Subtopic 3: Leveraging Financial Instruments

Beyond futures contracts, FUT ETF taps into various financial instruments to optimize its returns. One such instrument is derivatives, which derive their value from an underlying asset. The fund's use of derivatives, such as swap agreements and futures contracts, allows it to achieve its investment goals without directly investing in or shorting specific assets.
Furthermore, the fund allocates a portion of its assets to money market instruments. These short-term cash instruments provide stability and liquidity to the fund's cash balances. Repurchase agreements are among the tools employed, allowing the fund to buy back securities at a predetermined time and price.

FUT ETF offers investors a unique approach to achieving positive returns by skillfully navigating futures contracts and leveraging a variety of financial instruments. Its active management sets it apart from traditional ETFs, making it an intriguing option for those seeking diversification beyond traditional equity and fixed income markets. However, as with any investment, it's essential to thoroughly research and understand the fund's strategies before considering it for your portfolio.

Disclaimer: This article is for informational purposes only and does not provide investment advisory services.

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  • What is the FUT ETF?

    FUT ETF, is an exchange-traded fund that provides investors with exposure to companies operating in the relevant sector.

  • What is the underlying index that the FUT ETF aims to track?

    FUT ETF aims to track the performance of a specific index, which includes companies involved in various aspects of the relevant industry.

  • What types of companies are included in the FUT ETF?

    FUT ETF includes companies from the relevant industry, which may consist of specialized firms, equipment manufacturers, and other related entities.

  • How does the FUT ETF work?

    FUT ETF functions by pooling investors' capital to purchase a diversified portfolio of related stocks, aiming to replicate the performance of the underlying index.

  • What are the advantages of investing in the FUT ETF?

    Investing in the FUT ETF offers exposure to a specialized sector with potential for growth and innovation. It allows investors to diversify within the industry, which could experience significant advancements and expansion in the future.