For those who want to trade international equity indexes but wish they were more volatile, your wish is coming true. Today ProShares expanded its line-up with four new 2X leveraged ETFs covering developed markets, emerging markets, Japan and China.

ProShares already offered leveraged inverse ETFs on these four markets, but these are their first long-side international ETFs. The timing seems right. Markets around the globe are in rally mode and traders have turned more optimistic. “Green shoots” in the economy are making the turmoil of late 2008 recede from memory. The new ETFs are:

  • ProShares Ultra MSCI EAFE (EFO)
  • ProShares Ultra MSCI Emerging Markets (EET)
  • ProShares Ultra FTSE/Xinhua China 25 (XPP)
  • ProShares Ultra MSCI Japan (EZJ)

This is a new round in the cage match between ProShares and Direxion. EFO and EET are direct competition for funds offered by Direxion that track the same MSCI indexes with a 3X leverage target: Direxion Daily Developed Markets Bull 3X Shares (DZK) and Direxion Daily Emerging Markets Bull 3X Shares (EDC). It will be interesting to see what happens here. The day-traders who form the core audience for these aggressive ETFs seem unafraid of 3X leverage, so they may not have much use for the relatively tame ProShares products.

XPP and EZJ should have better prospects since there are no other leveraged long ETFs covering China and Japan. Today’s volume was not impressive for any of these funds, but it may take a few days for word to get around. I will be very surprised if they end up on our ETF Deathwatch list.

As with other leveraged ETFs, the new ProShares aim to deliver 2X their benchmark on a daily basis. The leverage will be reset each day, which means the results over periods longer than one day will vary, perhaps considerably. ETFs like these can be exceedingly dangerous in the wrong hands. For those who know the score and can handle the risk, however, they are a welcome addition to the toolbox.