An Easier Way to Short Emerging Markets
Stock market bears are getting some new tools.
ProShares, the only provider of exchange-traded funds that short the U.S. stock market, is rolling out a family of products that bet on declines in international equities.
The first two debuted on the American Stock Exchange last week: The Short MSCI EAFE (EFZ) is designed to produce the inverse of the daily return of the Morgan Stanley Capital Investment Europe Australasia Far East index, the most widely followed U.S. benchmark for tracking international equities, while the UltraShort MSCI EAFE (EFU) returns two times the inverse of the index.
The Short MSCI EAFE began trading at $70.20, and the UltraShort MSCI EAFE started at $70.32 on Wednesday.Next month, the Bethesda, Md., company expects to launch four more products that make more specialized bets: the Short MSCI Emerging Markets (EUM), Ultrashort MSCI Emerging Markets (EEV), UltraShort MSCI Japan (EWV) and the Ultrashort FTSE/Xinhua China 25 (FXP), which tracks the 25 largest companies by market-cap that operate in mainland China. The MSCI EAFE is considered the granddaddy of international indices, and the short ETFs provide an efficient way to bet against stocks around the world. But the ability to short emerging markets stocks should be particularly appealing to investors who fear these markets are becoming overvalued. China stocks have been surging over the past year and many investors fear the market is entering bubble territory. So far this year, world stock funds have returned 16.5%, according to Morningstar. However, the big gains have been in diversified emerging markets funds, up 43.5% year to date, and Pacific/Asia funds excluding Japan, the category China falls in. These have surged 64.6% this year.
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