ProShares Looking to Join Self-Indexing Movement

Published October 30, 2012

| Benzinga

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 (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 (BRF) and the Market Vectors Oil Services ETF (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 (MSCI) and Russell Investments. Other ETF providers that have filed to self-index include iShares, the world's largest ETF provider, Northern Trust's (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 (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 (FXI) tracks.

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