 The
Ultrapro Short S&P500 -3X ETF (SPXU) is an exchange-traded fund (ETF)
that seeks to provide investors with three times the daily inverse
performance of the S&P 500 Index. The ETF's objective is to provide
investors with leveraged exposure to the US equity market, but in a
way that profits from declining prices.
SPXU invests in a
portfolio of derivatives such as futures contracts, swaps, and
options, that are designed to provide investors with triple the daily
inverse return of the S&P 500 Index. The ETF uses leverage to achieve
this goal, which means that it borrows money to increase the size of
its investment in the derivatives.
As of September 2021, the
SPXU ETF has a net asset value (NAV) of approximately $1 billion and
holds a portfolio of derivatives contracts designed to provide inverse
exposure to the S&P 500 Index. The ETF's expense ratio is 0.95%, which
is higher compared to other ETFs.
SPXU has a track record of
providing investors with amplified returns when the market is
declining, but it is important to note that the ETF's returns can also
be amplified on the upside. Since its inception in 2009, the fund has
provided investors with an annualized return of around -33% (as of
March 23, 2023). However, the ETF is designed for short-term trading
and is not meant to be held for an extended period of time.
Overall, the Ultrapro Short S&P500 -3X ETF (SPXU) could be a good
investment option for investors looking to profit from declining
prices in the US equity market. However, due to its high expense ratio
and amplified risk profile, it may not be suitable for all investors.
Additionally, the ETF's returns may deviate significantly from the
returns of the underlying index over longer periods of time, due to
the effects of compounding and leverage.
|
