2X RUSSELL 2000 (LONG ONLY)
UWM is an exchange-traded fund (ETF) managed by ProShares that seeks daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the Russell 2000 index. The Russell 2000 index is a market-capitalization-weighted index of 2,000 small-cap U.S. equities.
As a leveraged ETF, UWM uses financial derivatives and borrowing to provide investors with amplified returns when the index it tracks increases. This means that if the Russell 2000 index increases by 1%, UWM is designed to increase by 2%. However, it’s important to note that leveraged ETFs like UWM carry higher risk and are typically used by sophisticated investors who are comfortable with the potential for higher volatility and potential losses.
Investors who are bullish on the small-cap U.S. stock market may consider investing in UWM as a way to amplify the potential returns of a small-cap stock market portfolio or as a way to bet on the future performance of the Russell 2000 index. However, it’s important to remember that leveraged ETFs like UWM are designed for short-term trading and are not suitable for long-term investing. Due to the compounding effect of leverage, these ETFs can experience significant losses over time if held for an extended period.
In summary, UWM is a leveraged ETF that offers investors the opportunity to invest in the small-cap U.S. stock market with amplified returns. It uses financial derivatives and borrowing to provide investors with exposure to the Russell 2000 index and is designed for short-term trading. Investors should carefully consider their investment objectives, risk tolerance, and investment horizon before investing in UWM or any other leveraged ETF.