The UltraShort S&P500 ProShares Fund (Ticker SDS) may strive for daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the S&P 500 index, but the expense drag to create the leverage may make the fund unsuitable for a long term "investment."
According to ETF Connect, in 2008, SDS gained 69.72% and SPY lost 37.70%. Twice the SPY losses would be 75.4%. The 5-day charts below show tight two to one inverse tracking over 5 days but over a year, it appears about 6% are lost to fund and transaction costs. 6% per year is a large fence to jump for an investment.
Click Current Chart Courtesy of Yahoo! for more info
According to ETF Connect, in 2008, SDS gained 69.72% and SPY lost 37.70%. Twice the SPY losses would be 75.4%. The 5-day charts below show tight two to one inverse tracking over 5 days but over a year, it appears about 6% are lost to fund and transaction costs. 6% per year is a large fence to jump for an investment.
Chart of the S&P500 Index (^GSPC) vs SDS
Click Current Chart Courtesy of Yahoo! for more info
As the historical chart below shows, the S&P500 was down a couple of percent over the three month period ending January 9, 2009 while SDS was down over 30%!
This doesn't make sense given Yahoo! charts are supposed to include the distributions. This table shows SDS paid a hefty dividend:| Date | Open | High | Low | Close | Volume | Adj Close* |
| 31-Dec-08 | 72.65 | 72.91 | 69.57 | 70.94 | 21,322,200 | 70.94 |
| 30-Dec-08 | 75.33 | 76.04 | 72.58 | 72.71 | 23,975,600 | 72.71 |
| 29-Dec-08 | 75.91 | 78.61 | 75.64 | 76.13 | 18,977,500 | 76.13 |
| 26-Dec-08 | 75.69 | 77.00 | 75.60 | 76.11 | 9,761,700 | 76.11 |
| 24-Dec-08 | 77.10 | 77.96 | 76.36 | 76.83 | 8,619,400 | 76.83 |
| 23-Dec-08 | 75.40 | 78.26 | 74.60 | 77.43 | 31,689,800 | 77.43 |
| 23-Dec-08 | $ 11.49 Dividend | |||||
| 22-Dec-08 | 84.58 | 90.50 | 84.43 | 87.44 | 35,138,400 | 75.95 |
As the next historical chart shows, SDS seems to work well on a daily basis for day traders who enter and exit many times during a day.
| FUND OPERATIONS |
| SDS | Category Avg. | |
| Total Expense Ratio | 0.91% | N/A |
| Total Net Assets | 2.90B | 170.28M |
Contact Info: ProShares client Services at 866-PRO-5125 or email them at info@proshares.com
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