ETF Spotlight: Long/Short, Alternative Investment | ETF Trends

ETF Spotlight on the ProShares RAFI Long/Short ETF (NYSEArca: RALS), part of an ongoing series.

Assets: $51.9 million

Objective: The ProShares RAFI Long/Short fund tries to reflect the performance of the RAFI US Equity Long/Short Index, which identifies opportunities that are implemented through both long and short securities positions.

Holdings: Top long holdings include AT&T (NYSE: T) 1.8%, Chevron (NYSE: CVX) 1.8%, Bank of America Corp (NYSE: BAC) 1.7%, JPMorgan Chase (NYSE: JPM) 1.3% and Exxon Mobil (NYSE: XOM) 1.2%. Top short holdings include Cisco (NasdaqGS: CSCO) -1.9%, Schlumberger (NYSE: SLB) -1.7%, Visa (NYSE: V) -1.4%, EOG Resources (NYSE: EOG) -1.3% and Apple (NasdaqGS: AAPL) -1.0%.

What You Should Know:

  • ProShares sponsors the fund.
  • RALS has a 0.95% expense ratio.
  • The ETF includes 233 positions.
  • Long sector weights include financial 21.8%, energy 12.8%, consumer cyclical 11.7%, tech 10.8%, health care 10.3%, consumer staples 9.1%, industrial 6.9%, basic materials 6.0%, utilities 5.8% and telecom 4.9%.
  • Short sector weights include financial -22.5%, consumer cyclical -14.5%, energy -13.5%, tech -10.4%, health care -10.0%, industrials -10.0%, consumer staples -6.7%, utilities -5.5%, basic materials -4.6% and telecom -2.3%.
  • As of March 21, 2014, the fund held 226 long positions and 229 short positions.
  • RALS is down 0.7% over the past month, up 5.0% over the past three months and up 2.1% year-to-date.
  • The ETF is 2.6% above its 200-day exponential moving average.
  • As a long/short strategy, RALS tries to provide absolute return over a full market cycle.
  • Due to its strategy, the fund is uncorrelated to traditional asset classes and provides investors with an alternative source for diversification. [Advisors Seek Alternative Investments, ETFs to Diversify Portfolios]
  • Holdings are selected based on the RAFI approach, which focuses on fundamental measures such as sales, dividends, cash flow and book value, to determine company weights.
  • Stocks with the highest RAFI weight compared to its market-cap weight are given a long position, whereas short positions are taken in stocks with the lowest rank.
  • The underlying RAFI Index is rebalanced monthly

Next page: The Latest News