ProShares unveils leveraged cybersecurity and cloud computing ETFs on Nasdaq

Jan 22nd, 2021 | By | Category: Alternatives / Multi-Asset

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ProShares has rolled out a pair of leveraged equity ETFs providing amplified exposure to two sought-after investment themes: cybersecurity and cloud computing.

ProShares unveil leveraged cybersecurity and cloud computing ETFs on Nasdaq

Michael L. Sapir, CEO of ProShares.

The ProShares Ultra Nasdaq Cybersecurity ETF (UCYB US) seeks investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the Nasdaq CTA Cybersecurity Index.

The ProShares Ultra Nasdaq Cloud Computing ETF (SKYU US) seeks investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the ISE CTA Cloud Computing Index.

The funds have listed on Nasdaq and come with net expense ratios of 0.95%.

“The growing need for remote computing, and our increased reliance on secure internet communications and connectivity—existing themes accelerated by the coronavirus pandemic—have expanded the already significant investment opportunities in the cybersecurity and cloud computing industries,” said ProShares CEO Michael L. Sapir.

“Our new ETFs will offer investors a way to gain leveraged exposure to these rapidly changing industries in a transparent ETF format.”

Cybersecurity methodology

UCYB’s reference index provides access to companies listed globally classified as “cybersecurity” by the Consumer Technology Association (CTA)—companies focused primarily on the building, implementation and management of technologies to protect networks, computers and mobile devices from cyber threats.

To be eligible for inclusion in the index, a security must have a minimum market capitalization of $250 million and three-month average daily dollar trading (ADDTV) volume of at least $1m. Initial weights are determined by dividing each security’s three-month ADDTV by the aggregate ADDTV of all index securities. These weights are then adjusted such that no security exceeds 6% or 3% for securities whose three-month ADDTV is not ranked among the top five.

The index is reconstituted semi-annually and rebalanced quarterly. It currently has 40 constituents with an average market capitalization of $20.10 billion. Significant positions include Crowdstrike (7.30%), Zscaler (6.77%), Accenture (5.54%), Cisco (5.49%) and Splunk (4.39%).

Cloud methodology

SKYU’s index provides access to US-listed companies classified as “cloud computing” by the CTA—firms providing Infrastructure-as-a-Service (servers, storage, and networks), Platform-as-a-Service (systems for the creation of online software), and Software-as-a-Service (software applications delivered over the internet) to their customers and end-users.

To be eligible for inclusion in this index, a security must have a minimum market capitalization of $500m and three-month average daily dollar trading (ADDTV) volume of at least $5m. The index uses a modified equal-weighting methodology based on a “cloud score” assigned by CTA. A company’s cloud score is determined by which particular activities the company is engaged in. Companies that offer IaaS receive 3 points. Those that offer PaaS receive 2 points. Those that offer SaaS receive 1 point. A company can be awarded points for each type of service they offer. Each company’s cloud score is divided by the total sum of the scores awarded to determine the weight of each security, with a maximum weight of 4.5%.

The index is reconstituted and rebalanced quarterly. It currently has 64 constituents with an average market capitalization of $105.17bn. The index includes some highly familiar names, such as Adobe, Alphabet (Google parent), Alibaba, Amazon, Cisco, HP Enterprise IBM, Microsoft, Oracle, Salesforce, SAP, and Zoom.

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