Skip to main content

Exit WCAG Theme

Switch to Non-ADA Website

Accessibility Options

Select Text Sizes

Select Text Color

Website Accessibility Information Close Options
Close Menu

The ProShares UltraShort Utilities ETF (SPD) Was Down 43.41% in 2014

The ProShares UltraShort Utilities ETF (NYSEArca: SDP) is a leveraged exchange traded fund that seeks to match 200% of the inverse daily performance of the Dow Jones US Utilities Index. In other words, the fund attempts to move twice as much as the index in the opposite direction on a daily basis. The fund seeks to invest at least 80% of its assets in common stocks, options, and derivatives of the index to provide leverage.

The utilities sector, which was up 23.63% in 2014, has recently been seen as a safe-haven sector to investors due to its relative stability and above average dividend yield. Shares of SDP were down 43.31% for the year, and even needed to execute a 1:4 reverse split early in November to maintain an attractive share price.

Leveraged funds are specifically structured for traders looking to time the market and realize short-term profits based on the underlying index making single-day moves. Leveraged funds are generally not suitable for long-term investors, as the investment will ultimately lose value or significantly underperform, over a longer term, compared to its stated objective. In fact, Direxion Funds, a leader in leveraged ETFs, puts this disclosure in bold print on its web-page for each of its leveraged funds: “The fund should not be expected to provide [the multiple] times the return of the benchmark’s cumulative return for greater than a day.” Therefore, these leveraged funds are highly unsuitable for long term investors.

If your financial advisor or stockbroker recommended that you invest in the ProShares UltraShort Utilities ETF, you may have options to recover your investment loss. If your advisor failed to fully disclose the risks of investing in the ProShares UltraShort Utilities ETF, then you may have a claim for misrepresentation. If your investment objective was to only invest in safe and stable investments, you may have a claim for unsuitability. If the ProShares UltraShort Utilities ETF made up a large portion of your portfolio, then you may have a claim for over-concentration and lack of diversification. If your advisor purchased this fund without your knowledge, you may have a claim for unauthorized trading. If your advisor purchased this fund on margin, you may have a claim for excessive use of margin and negligence.

The attorneys at Carlson & Associates, P.A., located in Miami, Florida, represent investors who have lost money due to the improper conduct of financial advisors. If you would like to have a free consultation, we can be reached at (305) 372-9700 to discuss your options.

By submitting this form I acknowledge that form submissions via this website do not create an attorney-client relationship, and any information I send is not protected by attorney-client privilege.

Skip footer and go back to main navigation