ProShares Ultra High Yield (UJB) seeks to deliver twice (2x) the daily performance of high-yield corporate bonds through leveraged exposure to junk bond markets. This leveraged fixed-income ETF amplifies both gains and losses from below-investment-grade corporate debt securities.
How It Works
UJB uses derivatives, swaps, and futures contracts to achieve 200% daily exposure to high-yield bond price movements without directly holding the underlying bonds. The fund resets its leverage daily at market close, meaning each trading day starts fresh with 2x exposure regardless of prior performance. ProShares actively manages the derivative positions to maintain the target leverage ratio, rebalancing throughout each trading session as bond prices fluctuate.
Key Features
- Provides 2x leveraged exposure to high-yield corporate bonds, amplifying both income potential and price appreciation compared to unleveraged alternatives
- Daily rebalancing mechanism allows precise leverage control but creates compounding effects that deviate from 2x long-term performance expectations
- Offers 2.97% dividend yield while maintaining leveraged exposure, combining income generation with amplified bond price sensitivity
Risks
- This ETF can lose value rapidly due to daily leverage reset causing compounding decay—two consecutive -10% underlying moves result in greater than -36% loss
- Rising interest rates can cause amplified losses as bond prices fall, with 2x leverage magnifying typical high-yield bond volatility of 8-12% annually
- Credit spread widening during economic stress can trigger severe declines as junk bonds underperform, with leverage doubling the typical 20-30% bear market losses
Who Should Own This
Best suited for active traders with high risk tolerance seeking short-term (days to weeks) tactical exposure to high-yield bond momentum. Requires daily monitoring due to leverage decay effects. Should represent no more than 2-5% of total portfolio given extreme volatility and unsuitability for buy-and-hold strategies.