ProShares Ultra MSCI Emerging Markets (EET) seeks to deliver twice (2x) the daily performance of the MSCI Emerging Markets Index, which measures the stock performance of large- and mid-cap companies across 24 emerging market countries including China, Taiwan, India, and South Korea.
How It Works
EET uses derivatives like swaps and futures contracts rather than directly holding emerging market stocks to achieve 2x leveraged exposure. The fund rebalances daily to maintain its 2x target, meaning it seeks 200% of the index's daily return, not longer-term performance. ProShares actively manages the derivative positions to track the underlying index, which covers approximately 1,400 stocks weighted by market capitalization across emerging economies.
Key Features
- Provides 2x leveraged exposure to emerging markets without margin requirements or complex derivatives trading for individual investors
- Covers 24 emerging market countries including major economies like China (30%+ weight) and India for concentrated developing market exposure
- Daily rebalancing maintains precise 2x target but creates compounding effects that diverge from 2x longer-term index performance
Risks
- Daily rebalancing causes compounding decay—if emerging markets drop 10% then rise 10%, this ETF does not return to break-even due to leverage mathematics
- Emerging market volatility amplified 2x means potential for 60-80% declines during crisis periods, far exceeding typical stock market losses
- Currency fluctuations, political instability, and liquidity constraints in emerging markets create additional volatility beyond developed market risks
Who Should Own This
Suitable only for sophisticated traders with high risk tolerance seeking short-term (hours to days) tactical exposure to emerging market momentum. Requires daily monitoring and should represent less than 5% of total portfolio. Completely inappropriate for buy-and-hold investors or retirement accounts due to compounding decay effects.