ProShares Debuts International Short ETFs

October 25, 2007

SAN DIEGO (ETFguide.com) - The old axiom on Wall Street is that money can be made in any kind of market.

To that end, ProShares has introduced a new round of bear exchange-traded funds (ETFs) which will focus on international stocks.

The Short MSCI EAFE (Ticker: EFZ) and the UltraShort MSCI EAFE (Ticker: EFU) launched yesterday on the American Stock Exchange and charge annual expense ratios of 0.95 percent.

These short ETFs are structured to provide the inverse daily performance of the market indexes that they track; that is, if MSCI EAFE declines by 1 percent in a day, the Short MSCI EAFE ProShares should gain 1 percent; if the index goes up by 1 percent in a day, the ETF should lose an equal amount.

The UltraShort ETFs are designed the same way, but with leverage.

The UltraShort ProShares aim to deliver twice the inverse of daily performance; in the above instance, where MSCI EAFE declined by 1 percent in a day, the UltraShort MSCI EAFE ProShares should appreciate by 2 percent and if the benchmark rose by 1 percent, the ETF should decline by 2 percent.

ProShares is also planning to add ETFs with a similar short strategy on more stock indexes including the MSCI Emerging Markets, MSCI Japan, and FTSE/Xinhua China 25. An estimated timetable for these other funds is slated for November.

Including yesterday's offering, ProShares now offers a family of 58 ETFs that provide built-in short or magnified exposure to well-known indexes.

"By introducing short ETFs to the marketplace—first on domestic market indexes and now on international—we have opened up opportunities for more investors to use short strategies to manage risk or to seek to benefit from market declines,” stated Michael Sapir, CEO of ProShare Advisors LLC.

ProShares is affiliated with ProFunds Group, which also offers mutual funds that have similar leveraged and short strategies.

Since their debut in June 2006, ProShares have attracted just over $9 billion in assets.