ProShares, a premier provider of ETFs, today launched ProShares Decline of the Retail Store ETF (NYSE Arca: EMTY), the first ETF specifically designed to benefit from the decline of bricks and mortar retailers. Also launching today is ProShares Long Online/Short Stores ETF (NYSE Arca: CLIX).
EMTY: Short Exposure to Bricks and Mortar Retail
EMTY is the first ETF designed to allow investors to benefit from the potential on-going erosion of value of retailers that rely principally on in-store sales. It provides consistent, daily short exposure (-1x) to the new Solactive-ProShares Bricks and Mortar Retail Store Index. The ETF is designed to deliver the inverse (opposite) of the daily performance of the index.
The Solactive-ProShares Bricks and Mortar Retail Store Index is the first comprehensive, public index to be composed exclusively of traditional retailers and is intended to become the standard for measuring their performance. It is equally weighted and currently has 56 constituent companies that include department stores, supermarkets and sellers of apparel, consumer electronics and home improvement items. Current constituents include retailers such as Barnes & Noble, The Gap, Macy’s, Kroger and Best Buy.
“Investors are witnessing signs of trouble in the malls and falling stock prices in the markets,” said Michael L. Sapir, co-founder and CEO of ProShare Advisors, LLC, the advisor to ProShares. “For the first time, investors can turn these trends into a potential investment opportunity through an ETF.”
Over 30 major retailers have declared bankruptcy over the past three years, nearly two-thirds of those in 2017, including Toys “R” Us, RadioShack and Payless. The pressure is expected to continue with some analysts predicting that online sales growth will outpace bricks and mortar retailers 3 to 1 by 2020.
“Retail is being profoundly disrupted by shoppers moving online, oversaturated markets and changing consumer behaviors,” Sapir said. “While some retailers that rely on in-store sales may be able to adapt, we believe those will be a minority, and that the long-term trend is against these companies and in favor EMTY’s strategy.”
CLIX: Long Online and Short Bricks and Mortar
CLIX, also launching today, is the first ETF to provide investors opportunities arising from both the potential growth of online companies and the decline of bricks and mortar retailers. It tracks the new ProShares Long Online/Short Stores Index which combines a 100% long portfolio of on-line and non-traditional retailers with a 50% short position in bricks and mortar retailers.
“With CLIX, investors not only receive the investment potential of online retailers like Amazon and Alibaba but also have the possibility of additional return from short exposure to traditional retailers,” Sapir said. “CLIX’s 50% net exposure to the equity markets may result in less volatility than typical long-only equity strategies.”
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More about the Solactive-ProShares Bricks and Mortar Retail Store Index
To be included in the Solactive-ProShares Bricks and Mortar Retail Store Index, a retailer must:
- Be characterized as receiving at least 50% of its revenue from retail operations.
- Receive 75% or more of its retail revenues from in-store sales.
- Be a U.S. company.
In addition, a retailer must have a market capitalization of at least $500 million, a six-month daily average value traded of at least $1 million, and meet other requirements. The index is rebalanced monthly and reconstituted annually.
More about the ProShares Long Online/Short Stores Index
The ProShares Long Online/Short Stores Index combines two specialized retail indexes. It includes a 100% long position in the ProShares Online Retail Index and a 50% short position in the Solactive-ProShares Bricks and Mortar Retail Store Index. The long and short positions are rebalanced monthly.
Retailers in the ProShares Online Retail Index include U.S. and non-U.S. companies. To be eligible, a retailer must:
- Be classified as an online retailer, an e-commerce retailer, or an internet or direct marketing retailer, according to standard industry classification systems.
- Have a market capitalization of at least $500 million.
- Have a six-month daily average value traded of at least $1 million and meet other requirements.
When the index is rebalanced, it is weighted so that no company may exceed 24% of the value of the index, the sum of companies individually weighing more than 4.5% may not exceed 50% of the value of the index, and the total weight of all non-U.S. companies will be capped at 25% of the value of the index. The index is rebalanced monthly and reconstituted annually.
ProShares has been at the forefront of the ETF revolution since 2006. ProShares now offers one of the largest lineups of ETFs, with more than $29 billion in assets. The company is the leader in strategies such as dividend growth, alternative and geared (leveraged and inverse). ProShares continues to innovate with products that provide strategic and tactical opportunities for investors to manage risk and enhance returns.
November 16, 2017
ProShares is the leader in dividend growth, alternative and geared (leveraged and inverse) strategies; Source: ProShares, Strategic Insight and Lipper, based on number of funds and/or assets, as of 12/31/16.
Retail revenue information for the Solactive-ProShares Bricks and Mortar Retail Store Index is based on Kantar Retail LLC data.
Sources for retail industry statistics: Bankruptcy.com and eMarketer.
ProShares EMTY seeks a return that is -1x the return of the index (target) for a single day, as measured from one NAV calculation to the next. Due to the compoundingof daily returns, EMTY's returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period. Investors should monitor their holdings consistent with their strategies, as frequently as daily. For more on correlation, leverage and other risks, please read the prospectus.
Investing involves risk, including the possible loss of principal. These ProShares ETFs are non-diversified and entail certain risks, which may include risks associated with the use of derivatives (such as swap agreements, futures contracts and similar instruments), imperfect benchmark correlation, leverage and market price variance, all of which can increase volatility and decrease performance. EMTY seeks short exposure and should lose money when its index rises. CLIX’s short positions are not intended to hedge the portfolio in market downturns, but rather to allow stocks with unfavorable outlooks to contribute to performance. Short positions lose value as security prices increase. Investments in the consumer discretionary and retailing industries are subject to risks such as changes in domestic and international economies, interest rates, competition and consumer confidence; disposable household income; consumer tastes and preferences; intense competition; changing demographics; marketing and public perception; and dependence on third-party suppliers and distribution systems. Investments in smaller companies typically exhibit higher volatility. Smaller company stocks also may trade at greater spreads or lower trading volumes, and may be less liquid than stocks of larger companies. CLIX invests in international investments, which may involve risks from: geographic concentration, differences in valuation and valuation times, unfavorable fluctuations in currency, differences in generally accepted accounting principles, and from economic or political instability. In emerging markets, many risks are heightened, and lower trading volumes may occur. Please see the summary and full prospectuses for a more complete description of risks. There is no guarantee any ProShares ETF will achieve its investment objective.
Carefully consider the investment objectives, risks, charges and expenses of ProShares before investing. This and other information can be found in their summary and full prospectuses. Read them carefully before investing.
“Solactive AG,” a registered trademark of Solactive AG, and the Solactive-ProShares Bricks and Mortar Retail Store Index have been licensed for use by ProShare Advisors LLC (“ProShares”) in connection with the Decline of the Retail Store ETF. ProShares Long Online/Short Stores Index is owned by ProShares and licensed to the ProShares Long Online/Short Stores ETF. ProShares is solely responsible for overseeing the methodology governing the operation of Long Online/Short Stores Index and for adopting and implementing changes to such methodology. Solactive AG serves as index calculation agent for this Index and performs routine daily index calculations and index maintenance (e.g., annual Index reconstitution, quarterly rebalancing, and corporate actions) of this Index. The Funds are not sponsored, endorsed, sold, or promoted by Solactive AG and Solactive AG makes no representation regarding the legality or suitability of the Funds, or the advisability of investing in the Funds. SOLACTIVE AG AND ITS AFFILIATES MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO PROSHARES AND THE FUNDS. Solactive AG does not offer any express or implicit guarantee or assurance either with regard to the results of using any Index and/or Index trade mark or any Index price at any time or in any other respect. Each Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the each Index is calculated correctly. Solactive AG has no obligation to point out errors in any Index to third parties, including but not limited to investors and/or financial intermediaries of the Fund. Neither publication of the Indexes by Solactive AG nor the licensing of any Index or Index trade mark for the purpose of use in connection with a Fund constitutes a recommendation by Solactive AG to invest capital in a Fund nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in a Fund. The Funds are not sponsored, promoted, sold or supported in any other manner by Solactive AG, ProShares does not make any representation, warranty or guaranty, express or implied, as to the results to be obtained by the Funds or any other person from the use of any Index or the data therein.
ProShares are distributed by SEI Investments Distribution Co., which is not affiliated with the funds' advisor.
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