New Exchange Traded Funds (ETFs) come to market all the time while others die quiet deaths. With the coming of spring, several new ETFs have bloomed and now offer interesting opportunities that have been previously unavailable to retail investors.
ProShares, a leader in inverse exchange traded funds, has introduced a series of new inverse funds that offer investors single inverse, or 100% exposure opposite the movement, of the underlying index.
ProShares has been a leader in 2X or double inverse Exchange Traded Funds and so this development is interesting as they now are offering new single inverse funds in sectors that previously haven’t had single inverse exposure available.
The three new ETFs focus on China, U.S. Real Estate and Basic Materials by tracing the FTSE/Xinhua China 25 Index, the Dow Jones Real Estate Index and the U.S. Basic Materials Index.
Like all inverse ETFs, these track the performance of the index for one day only and so over time there can be significant performance differentials to the index depending upon the performance of the underlying index and market volatility. For this reason, it’s important to read and understand how these inverse funds are structured so you’re not disappointed or surprised by their performance in varying market conditions. However, for investors and traders who know what they’re doing, these three single inverse funds offer new opportunities to “short” these indexes.
ProShares Trust Short FTSE/Xinhua China ETF (YXI) boasts an expense ratio of .95% and holds top Chinese companies like China Mobile, Industrial and Commercial Bank of China and China Construction Bank.
ProShares Short Basic Materials (SBM)offers inverse exposure to the materials sector through holdings in companies like Dow Chemical and Dupont.
Finally, ProShares Trust Short Real Estate Exchange Traded Fund (REK) gives bearish investors short exposure to the Dow Jones Real Estate Index with holdings in companies like Simon Properties and Vornado Realty.
On the other side of the spectrum, new ETFs offer bullish investors new opportunities in metals like copper and platinum.
First Trust ISE Global Copper Exchange Traded Fund (CU) offers investors exposure to the copper market without having to buy futures contracts. Copper is often considered a leading economic indicator as it’s widely used in new building construction and so expanding global growth should increase demand for copper and for this new exchange traded fund.
Meanwhile, platinum exposure can now be found in First Trust ISE Global Platinum (PLTM). Demand for platinum generally increases with increases in automotive production since it’s used in catalytic converters and airbags and also in computer hard drives which typically see growth in bullish market conditions so this could be a bullish play in the industrial metals market.
And finally, Direxion, a major provider of 3X leveraged exchange traded funds, has introduced a series of six funds which this time offer 2X, or double leverage, in new markets focusing on the BRIC countries (Brazil, Russia, India and China) and a more focused 2X India fund. These come in both bullish and bearish formats to give investors long or short exposure in these indexes so you can make a bet on whichever direction you believe these markets will take.
The Direxion funds and symbols are as follows:
Daily BRIC Bull 2x Shares (BRIL)
Daily BRIC Bear 2x Shares (BRIS)
Daily India Bull 2x Shares (INDL)
Daily India Bear 2x Shares (INDZ)
So, with the first flowers of spring, new ETFs are also coming into bloom, and interested investors can investigate these new offerings to see how they might fit into an overall investment mix and strategy.