UPRO Stock Recent News

The S&P 500 Index closed above 5,200 for the first time ever, following the Fed's signal to cut interest rates. This will mark the end of the most aggressive Fed hiking cycle and fuel corporate profits.

UPRO is a triple-leveraged ETF that aims to deliver three times the daily return of the S&P 500, but it comes with high volatility and drawdown risks. Despite the risks, owning UPRO can be a strategic way to ride the stock market rally while protecting against significant losses. By allocating a portion of a portfolio to UPRO and cash, investors can effectively "delever" and emulate the performance of the S&P 500 while minimizing downside exposure.

Thirteen months ago, we recommended buying ProShares 3X fund UPRO based on signals of the end of the bear market. However, the strong buy signals of last year are fading as we enter 2024, suggesting reducing leverage by selling UPRO and buying SPY. The caution of reducing leverage is advised as both sentiment swings towards "too many bulls" and buying activity in UPRO declines.

The ProShares UltraPro S&P500 ETF aims to deliver 3x the one-day returns on the S&P 500 Index. Levered ETFs like UPRO have positive convexity and volatility decay, causing them to deviate significantly from their underlying indices over time. Nimble traders can take advantage of positive convexity and use levered ETFs as swing trading instruments.

ProShares UltraPro S&P500 ETF has experienced a bearish trend, losing 17.92% in the last month. The market correction in September 2023 and a bleak market outlook have contributed to UPRO's downward pressure. The leveraged ETF market faces headwinds such as high inflation, rising interest rates, and the reduction of the Federal Reserve's stimulus.

Leveraged ETFs, such as UPRO and SPXL, are potentially valuable tools for portfolio construction, offering the ability to multiply daily S&P 500 gains by 3. The alphas of these funds fluctuate over time, closely tracking interest rates, due to borrowing used to generate leverage. High interest rates can cause a major drag on leveraged ETFs, e.g. 10x the magnitude of their expense ratios in 2023.

ProShares offers the popular UltraPro 3x S&P 500 leveraged ETF. Stock market concentration has been beneficial for leveraged ETF performance over the past 10–15 years. As risk adjusted metrics for funds like UPRO indicate, investors should exercise particular caution.

While the S&P500 is heading toward a bull market, following a 19.7% rally from the October 2022 lows, traders have raised their bearish bets on the index.

At the moment, investor activity in UPRO is not telling us much about what investors think about market direction. The last indication occurred at the October bottom when there was measurable cash flow into the fund.

With a few exceptions, UPRO has consistently produced an average daily return of 3X the S&P 500, both up and down. Long term, and at great risk, it has produced since 2010 an average return of 2.06X the annual return of the S&P 500 - 26.4% versus 12.6%.