Market Overview

ProShares Looking to Join Self-Indexing Movement


ProShares, the largest sponsor of inverse and leveraged ETFs, has filed a request with the Securities and Exchange Commission to use its own indexes for its ETFs. Maryland-based ProShares is the latest ETF sponsor to show interest in self-indexing.

Van Eck, parent company of Market Vectors, and WisdomTree (NASDAQ: WETF) currently self-index. Earlier this year, Market Vectors turned to its own indexes for the Market Vectors Coal ETF (NYSE KOL) and the Market Vectors Gaming ETF (NYSE: BJK). Other popular Market Vectors ETFs that track firm-sponsored indexes include the Market Vectors Brazil Small-Cap ETF (NYSE: BRF) and the Market Vectors Oil Services ETF (NYSE: OIH).

Self-indexing can be viewed as cost-saving measure for ETF sponsors because those companies must pay fees to index providers such as MSCI (NYSE: MSCI) and Russell Investments. Other ETF providers that have filed to self-index include iShares, the world's largest ETF provider, Northern Trust's (NASDAQ: NTRS) FlexShares unit and Guggenheim Investments, according to Index Universe.

ProShares is the first large provider of inverse and leveraged ETFs to look to self-index. Most ProShares leveraged, or "geared," ETFs are benchmarked to the same index as their traditional counterparts. For example, the ProShares UltraShort FTSE China 25 (NYSE: FXP) seeks to provide twice the daily inverse returns as the FTSE China 25 Index. That is the same index the iShares FTSE China Index Fund (NYSE: FXI) tracks.

The ProShares UltraShort Financials (NYSE: SKF) does the same thing with the Dow Jones U.S. Financials Index (NYSE: IYF). That is the same index tracked by the iShares Dow Jones U.S. Financial Sector Index Fund (NYSE: IYF).

ProShares had $22.4 billion in assets under management as of October 26, making it the sixth-largest U.S. ETF issuer, according to Index Universe data.

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Posted-In: prosharesNews Broad U.S. Equity ETFs Specialty ETFs After-Hours Center Markets ETFs


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