Eagle Daily Investor

How to Explore Alternative Investments with ProShares

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The traditional advantages of investing with exchange-traded funds (ETFs) are that they provide transparency, flexibility and cost effectiveness. But an additional implicit benefit is the chance to gain exposure to investment vehicles or strategies which are out of your reach as an individual, either because you lack the required capital or because the strategy is mostly available to professionals.

ETFs offer the chance to invest in a range of alternative investments other than traditional stocks and bonds, yet with the simplicity of buying and the transparency of pricing that is available in the stock market. One ETF company which specializes in alternative ETFs is ProShares.

Founded in 2006, ProShares now offers more than 140 alternative investment ETFs, the largest alternative investment ETF lineup in the United States. ProShares is especially well known for its funds that provide magnified exposure (2x or 3x the daily earnings) to an index or inverse earnings of an index.

For instance, those who began the year betting against the S&P 500 by investing in the UltraPro Short S&P500 (SPXU) ETF temporarily saw their contrarian bet pay off big, as it jumped 10% by the end of January. However, the volatile nature of triple-inverse investing becomes obvious when you see that, as of today, the ETF has a year-to-date loss of 0.71%. Last year, when the S&P 500 gained more than 30%, SPXU was down 60.04% for the year.

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Alternative investing can be attractive to those seeking maximum diversity in their portfolios, and using alternative investments from ProShares allows you to do so in a variety of ways, and with a variety of funds. However, if you use alternative investments, I recommend that you do extra research to be clear about how much risk you are accepting.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed them, I encourage you to read my articles from previous weeks about ETF providers Vanguard, iShares and State Street. I also invite you to share your thoughts below.

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About Doug Fabian

Doug Fabian is the editor of the monthly investment newsletter Successful Investing and is the host of the syndicated radio show, "Doug Fabian's Wealth Strategies." Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug published the book, "Maverick Investing," and has appeared as a commentator on CNBC, Fox News and CNN. He also has been quoted in the Wall Street Journal, USA Today, Barron's and other publications.

View all posts by Doug Fabian →

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