SAA Profile
The ProShares Ultra SmallCap600 fund is designed to provide investors with a leveraged exposure to the performance of the small-cap segment of the U.S. equity market. To achieve its investment objective, the fund employs a strategy involving various financial instruments, including futures contracts, options, and swaps, which aim to deliver daily returns that are twice the performance of its underlying index. This leveraged approach is intended to enhance potential returns, but it also introduces increased volatility and risk compared to non-leveraged funds.
The underlying index for this fund is a float-adjusted, market capitalization-weighted benchmark that comprises 600 U.S. operating companies and real estate investment trusts (REITs). The selection process for the index incorporates several criteria, such as liquidity, price, market capitalization, financial viability, and public float. By focusing on these factors, the index aims to represent a broad cross-section of small-cap stocks that exhibit strong financial characteristics and market presence.
The ProShares Ultra SmallCap600 fund's investment strategy involves actively managing its exposure to the index through a range of derivative instruments. These financial tools are utilized to amplify the daily performance of the index, providing investors with enhanced exposure to the small-cap sector. However, the use of leverage means that the fund's returns can be significantly more volatile than those of non-leveraged counterparts. Investors should carefully consider the implications of this volatility on their investment goals and risk tolerance.
As a non-diversified fund, the ProShares Ultra SmallCap600 focuses its investments on a specific segment of the marketâ€the small-cap sector. This concentrated approach allows the fund to target potential growth opportunities within this sector but also exposes it to sector-specific risks. By investing in this fund, investors seek to capture the growth potential of smaller, emerging companies while acknowledging the inherent risks associated with a leveraged investment strategy.
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