ProShares Advisers Launches Octet Of ETFs

Raising the delicious inevitability of widespread shorting of short positions, ProShares Advisors launched an octet of new exchange-traded funds this morning, including a group offering short positions of several major indices. The funds – the first from ProShares, a division of the ProFunds Group – are the first ETFs to feature leveraging and inverse exposure, and mark the return of Gus Fleites to the ETF marketplace he helped pioneer at State Street Global Advisors.

The new funds track four indices, the Standard & Poor’s 500, Nasdaq-100, Dow Jones Industrial Average and S&P MidCap 400, with the “ultra” funds offering twice the performance of the underlying index, and the “short” funds offering short exposure to the benchmarks. The firm has also filed for four “ultrashort” funds, which would offer double inverse exposure to the four indices, which already are the basis for some of the most widely-traded ETFs. Clifford Weber, senior v.p. for the ETF marketplace at the American Stock Exchange, says he expects those funds to launch within a couple of weeks, and that the Amex is working to make options on the funds available.

“We believe they are the next chapter of ETFs,” Michael Sapir, CEO of ProShares, said at a media briefing, adding that he expects the funds to be most popular with sophisticated investors, financial advisers and institutions. “We are not targeting Mom and Pop investors with these ETFs.” ProShares President Louis Mayberg noted that the funds offer investors institutional buying-power on margin – especially attractive to smaller hedge funds – to which only the largest investors currently enjoy access. The management fee on the funds is set at 95 basis points.

Asked about the prospect of shorting a short fund, Sapir said, “Our expectation is investors will teach us ways to use these products that we hadn’t thought of.”

ProShares Joins The Fray