ProShares Trust UltraShort MSCI Emerging Markets (EEV) seeks to deliver twice the inverse (-2x) daily performance of the MSCI Emerging Markets Index, which measures large- and mid-cap stocks across 24 developing countries including China, India, Taiwan, and South Korea.
How It Works
EEV uses derivatives like swaps and futures contracts to achieve -200% exposure to emerging markets equity performance on a daily basis. The fund rebalances daily to maintain its -2x target, meaning it resets its leverage each trading day. As an inverse leveraged ETF, it profits when emerging markets decline and loses value when they rise, with returns compounding based on daily moves rather than longer-term performance.
Key Features
- Provides -200% daily exposure to emerging markets, profiting from declines in developing country stock markets
- Daily rebalancing maintains precise -2x inverse leverage but creates compounding effects over multiple days
- Covers 24 emerging market countries with heavy weighting toward Chinese and Taiwanese technology companies
Risks
- This ETF can lose substantial value if emerging markets rise, with potential for 40-60% daily losses during strong market rallies
- Daily reset causes compounding decay—if markets fall 10% then rise 10%, the fund does NOT return to break-even
- Emerging market volatility amplifies losses, and currency fluctuations add additional unpredictable risk to inverse positions
Who Should Own This
Designed exclusively for sophisticated traders with hours-to-days time horizons seeking tactical hedges against emerging market exposure or short-term bearish bets. Requires high risk tolerance and active monitoring. Should represent less than 5% of portfolio and never held as buy-and-hold investment due to compounding decay.