Opening up a new avenue of alternative investment strategies that are traditionally in the domain of hedge funds, ProShares received approval for eight new exchange traded funds that track credit default swaps.
According to a recent filing, the Securities and Exchange Commission signed off on eight new actively managed credit default swaps ETFs, including the ProShares CDS North American HY Credit ETF, ProShares CDS Short North American HY Credit ETF, ProShares CDS North American IG Credit ETF, ProShares CDS Short North American IG Credit ETF, ProShares CDS European HY Credit ETF, ProShares CDS Short European HY Credit ETF, ProShares CDS European IG Credit ETF and the ProShares CDS Short European IG Credit ETF.
The new CDS ETFs will be listed on the BATS exchange. No ticker symbols have yet to be provided.
Credit default swaps, or CDS, provide a way to play the creditworthiness of the riskiest to the safest corporate debt issuers. Essentially, CDS hedge against possible issuer default on bonds. CDS buyers pay sellers until the contract matures. In turn, the seller agrees to compensate the buyer in the event of default. [Because You Need a CDS ETF]
If you believe a debt market, like junk bonds or European corporate debt issuers, will struggle to pay back loans, then a CDS ETF could provide a hedge against the targeted markets.