ProShares Launches Inverse Investment Grade and Junk Bond ETFs

March 29, 2011 by  
Filed under Commentary, ETF IPOs (New ETFs)

ProShares introduced two new ETFs the past week that for the first time provide ETF investors with inverse exposure to corporate bonds:  ProShares Short High Yield (SJB) launched 3/22/11 and ProShares Short Investment Grade Corporate (IGS) arrived today (3/29/11).

ProShares Short High Yield (SJB) seeks to provide inverse exposure to the corporate junk bond (“high yield”) market by tracking -1x the daily performance of the Markit iBoxx $ Liquid High Yield Index.  The fund is currently achieving its desired exposure with swaps tied to the inverse performance of the iShares iBoxx $ High Yield Corporate Bond Fund (HYG).  SJB has an expense ratio of 0.95%, and additional information is located in the press release, overview, and prospectus.

ProShares Short Investment Grade Corporate (IGS) seeks to provide inverse exposure to the investment grade corporate bond market by tracking -1x the daily performance of the Markit iBoxx $ Liquid Investment Grade Index.  The fund is currently achieving its desired exposure with swaps tied to the inverse performance of the iShares iBoxx $ Investment Grade Corporate Bond Fund (LQD).  IGS has an expense ratio of 0.95%, and additional information is located in the press release, overview, and prospectus.

Although there are a few mutual funds (AFBIX, RYIHX, and PHBRX) providing inverse junk bond exposure, ProShares is the first to offer inverse corporate bond ETFs (both investment grade and junk) and therefore faces no immediate direct competition.  In fact, prior to the launch of Direxion Daily Total Bond Market Bear 1x Shares (SAGG) and SJB last week, all previous inverse bond ETFs were strictly targeted to Treasury securities.

Disclosure covering writer, editor, and publisher:  No positions in any of the securities mentioned.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

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