The SPX (S&P 500 Index) quickly bounced last week after trading at trendline support and as low as 1598.23 last week, and we saw exceptional activity late in the week in a leveraged long fund, UPRO (ProShares UltraPro S&P 500, Expense Ratio 0.95%).
The fund reeled in north of $260 million last week, bringing the total fund AUM to $409 million. UPRO is designed to provide three times the daily leveraged return of the S&P 500 Index, and is increasingly used by short term directional/opportunistic traders as well as aggressive portfolio speculators and hedgers alike.
Similar leveraged long products that target U.S. Large Cap equities that have been well received in the marketplace since inception in terms of overall asset flows and daily volume levels, include SSO (ProShares Ultra S&P 500, Expense Ratio 0.95%), and SPXL (Direxion Daily S&P 500 Bull 3X, Expense Ratio 0.95%), and like UPRO, have seen a strong uptick in trading volume in the past several sessions amid the recent SPX volatility.
Since these funds rely on daily leverage, they were designed and intended for short term usage only, in trading and/or hedging strategies, and certainly not aligned for “buy and hold” use.
However, that hasn’t stopped these funds from accumulating assets, as SSO currently has $2.5 billion in AUM (ADV 6.2 million shares), UPRO (ADV 3 million shares), and SPXL has attracted $238 million in AUM (1.3 million shares).