Double Trouble: Rydex Fights to Fend Off Upstart Copycat Funds

If imitation is the highest form of flattery, then Rydex should be blushing. Instead, the Rockville, Md.-based fund company has been watching its back and taking a page out of its imitators' book.

Since launching in 1993 as a haven for active traders who live and die by split-second market timing -- the $8.5 billion in assets the fund company owns -- has inspired two competitors created by defectors from within its own ranks. Now, as one of the upstart defectors is nipping at Rydex's heels, the fund complex and its rivals are furiously rolling out new products aimed at poaching the others' key funds. In the process, they are becoming more and more alike each day.

ProFunds, a $2.5 billion upstart, last week made a strike at Rydex by filing for 17 sector funds -- the exact number that Rydex has, covering many of the same industries. Not to be outdone, Rydex announced this week that it is launching two leveraged international index funds just like ProFunds has, albeit using different indices. And Rydex will roll out a twice-leveraged Nasdaq 100 fund within days, mimicking ProFunds' largest offering. The younger company has plans to introduce an unleveraged Nasdaq 100 fund -- copying guess who? ...