SDOW: A 3x Leveraged Inverse DOW ETF
The SDOW is an inverse-equity, exchange-traded fund (ETF) that's designed to be held for one-day periods and works as a tool to aggressively offset the movements of the Dow Jones Industrial Average (DJIA). Investors looking to hedge their exposure can hold the SDOW for one day, although the ETF's expense ratio makes it a poor choice to hold any longer than one day.
SDOW ETF Summary
Following are some of the vital stats for this ETF:
ETF Ticker: SDOW
Name of ETF: Ultra Pro Short Dow 30 ETF
ETF Provider: ProShares
Asset Tracked or Index Benchmark: Dow Jones Industrial Average Index
Inception Date of SDOW: February 9th, 2010
Description of the SDOW Stock
ProShares UltraPro Short Dow 30 seeks daily investment results, before fees and expenses, that correspond to three times the inverse (-3x) of the daily performance of the Dow Jones Industrial Average. So it is both a leveraged and inverse exchange-traded product.
This Short ProShares ETF seeks a return that is -3x the return of an index or another benchmark (target) for a single day, as measured from one NAV calculation to the next. Due to the compounding of daily returns, ProShares' returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period.
These effects may be more pronounced in funds with larger or inverse multiples and in funds with volatile benchmarks. Investors should monitor their holdings consistent with their strategies, as frequently as daily
SDOW tracks the Dow Jones Industrial Average Index (DOW) but in the opposite (inverse) direction. As the Dow decreases in value, SDOW increases in price. It also seeks a 3x leveraged return on the underlying index. SDOW targets triple the daily return of the index, in the opposite direction.
In order for SDOW to execute an inverse and leveraged return on the DOW, it utilizes derivatives such as swaps as well as some other assets and cash in its holdings.
Top Holdings in SDOW
The following securities represent the largest holdings in the SDOW ETF:
- DJ INDUSTRIAL AVERAGE SWAP CREDIT SUISSE INTERNATIONAL
- DJ INDUSTRIAL AVERAGE SWAP GOLDMAN SACHS INTERNATIONAL
- SPDR DOW JONES INDUSTRIAL AVERAGE (DIA) SWAP DEUTSCHE BANK AG
- DJ INDUSTRIAL AVERAGE SWAP DEUTSCHE BANK AG
- SPDR DOW JONES INDUSTRIAL AVERAGE (DIA) SWAP GOLDMAN SACHS INTERNATIONAL
- DJ INDUSTRIAL AVERAGE SWAP BANK OF AMERICA NA
- DJIA MINI
- DJ INDUSTRIAL AVERAGE SWAP SOCIETE GENERALE
- DJ INDUSTRIAL AVERAGE SWAP CITIBANK NA
- DJ INDUSTRIAL AVERAGE SWAP MORGAN STANLEY & CO. INTERNATIONAL PLC
- DJ INDUSTRIAL AVERAGE SWAP UBS AG
- NET OTHER ASSETS AND CASH
These holdings are subject to change at Proshares' discretion, but as of the publication of this article (June 22, 2016), these are the top holdings in the exchange-traded fund.
For full information about this fund, be sure to visit the full SDOW Fact Sheet on the Proshares website.
Keep in mind you have to be disciplined in your selection process of any exchange-traded product. While ETFs and ETNs offer a lot of advantages, they are not without risk. No asset is risk-free. So be sure to research any exchange trade products on this list before making any trades.
Look under the hood and see what is in the ETF, take a look at its performance history and see how it reacted to different market conditions. If you have any questions or concerns, be sure to consult a financial professional such as a financial advisor or your broker.
The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.