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UCS ETF update: ProShares Technology Fund

Our last ETFcast covered the concepts of selling short and why many traders and managers do it. I listed one of the largest short and leveraged ETF funds in the industry, ProShares, and I briefly mentioned that I would go a little more in depth on a number of sector funds within that particular family of funds.

I have been feeling/looking positively towards the technology sector lately, but not from a
selling short standpoint. Word on the street, is that many technology companies (especially the majors) have lots of cash on the balance sheets for capital spending, example see Microsoft, Apple, first qtr earning results; Well, if that's so, wouldn't it be just a matter of selecting the right stock or fund/s to invest in?

The
ProShares Ultra Technology Fund. The fund seeks daily investment results, before fees, and expenses, that correspond to twice (200%) the daily performance of the Dow Jones Technology Index. Inception date: 1/30/2007. The fund carries less than 100 million in assets. It's a pretty new fund and barely have much of a track record. It carries a high beta- 2.0 and since its inception the fund is down almost 59.25%. Wow! I like the top ten holdings of the fund: Microsoft, IBM, Cisco, Apple, Intel, Google- Class A, HWP, Oracle, Qualcomm, and EMC Corp. ie, great stuff. I would use tightly placed sell stops to protect profits. I would not sell it short because the fund manages a short sister fund (ProShares UltraShort Technology Fund) with seven (7) times the value of the Ultra leveraged fund.

Well, if you were thinking about purchasing an individual technology stock, this fund offers an opportunity to participate in the technology sector without taking the risk of a one position exposure (losing all of your money) by owning one technology stock if the stock tanks. The last trade as of 5/21/2009 at 4:00 pm was $27.13. This etf fund traded as low as $15.64 in March of 2009, but has steadily climbed out of the doldrums. The fund is pretty volatile, because of the leverage being used. Remember, it returns twice the daily results of the index; so if you invested $1000 in the fund and the index increased 10% today, you would see a return of $ 200 today and vice-versa if the index went down 10% tomorrow you see a negative return on your investment by $200.

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