ProShares Debuts Alternatives ETF

ProShares, the largest issuer of inverse and leveraged ETFs, continues expanding its lineup of non-leveraged offerings with Thursday’s launch of the ProShares Morningstar Alternatives Solution ETF (NYSEArca: ALTS).

The new ETF is designed to be a complement to traditional equity and fixed income portfolios by enhancing risk-adjusted returns. ALTS is the only ETF based on a Morningstar index comprising a broad range of alternative strategies, according to a statement issued by Maryland-based ProShares.

ALTS, which tracks the Morningstar Diversified Alternatives Index, is an “ETF of ETFs” as its seven holdings are other ProShares ETFs, including a 5.9% weight to the ProShares Managed Futures Strategy (NYSEArca: FUTS), which debuted last week. [ProShares Launches Managed Futures ETF]

Managed futures strategies are also used in asset classes such as bonds and currencies, aiming to garner value in a variety of market conditions. Managed futures portfolios have historically provided risk-adjusted returns comparable to those of stocks with low correlation to the stock and bond markets, according to ProShares.

The largest holding in ALTS is a 24% weight to ProShares RAFI Long/Short ETF (NYSEArca: RALS), which is based on strategies developed by the “father of fundamental indexing,” Rob Arnott. That is followed by a 22.2% weight to the ProShares Hedge Replication ETF (NYSEArca: HDG), another long/short ETF aimed at damping market risk. [Alternative ETF Strategies]