2X RUSSELL 2000 (LONG & SHORT)
UWM and TWM are exchange-traded funds (ETFs) managed by ProShares that offer investors the opportunity to invest in the Russell 2000 index with leverage.
The ProShares Ultra Russell2000 ETF (UWM) aims to provide daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the Russell 2000 index. This means that if the Russell 2000 index increases by 1%, UWM is designed to increase by 2%. UWM is a “long” ETF, which means it is designed to provide investors with amplified returns when the index it tracks increases.
On the other hand, the ProShares UltraShort Russell2000 ETF (TWM) aims to provide daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the Russell 2000 index. This means that if the Russell 2000 index declines by 1%, TWM is designed to increase by 2%. TWM is a “short” ETF, which means it is designed to provide investors with amplified returns when the index it tracks decreases.
Both UWM and TWM are designed to provide leveraged exposure to the Russell 2000 index, which means that they use financial derivatives and borrowing to increase the potential returns of the underlying index. However, leveraged ETFs like UWM and TWM also 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. This ETF can be used 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. Similarly, investors who are bearish on the small-cap U.S. stock market may consider investing in TWM as a way to hedge against potential losses in a small-cap stock portfolio or as a way to bet on the future decline of the Russell 2000 index.
It’s important to note that leveraged ETFs like UWM and TWM 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 addition, there is no guarantee that these ETFs will meet their stated investment objectives.
In summary, UWM and TWM are leveraged ETFs that offer investors the opportunity to invest in the Russell 2000 index with amplified returns. UWM is a “long” ETF that aims to provide investors with amplified returns when the index increases, while TWM is a “short” ETF that aims to provide investors with amplified returns when the index decreases. However, these ETFs carry higher risk and are designed for short-term trading, so it’s important to do your research and understand the risks before investing.