ProShares, a US-based provider of specialist exchange-traded funds, has launched a suite of four S&P 500 Ex-Sector ETFs. The ETFs each provide exposure to the S&P 500 minus a particular sector – either energy, financials, technology or health care.
ProShares suite of ETFs provide S&P 500 exposure excluding particular sectors.
“S&P 500 ETFs force you to invest in a sector you might already have a desired level of exposure to or you may want to avoid,” said Michael L. Sapir, co-founder and CEO of ProShares. “Now, for the first time, you can invest in an S&P 500 ETF and leave behind the sector [energy, financials, technology or health care] you don’t want.”
According to ProShares this offers the investor the opportunity to exclude sectors which they expect to underperform perhaps due to overvaluation or thematic views. For example, the earnings in the energy sector have recently been hit by low oil prices which has seen the sector underperform the broader index. Longer-term, the growth in renewables and the possibility of increased regulation on carbon intensive industries may hurt future profits. In this case, the ProShares S&P 500 Ex-Energy ETF may be a viable option for an investor. Alternatively, an investor might already have enough exposure to a sector through work or other holdings and can use these ETFs to avoid that sector.
S&P 500 sector suites such as SSGA’s Select Sector SPDR ETFs can be used to implement similar portfolio strategies; however, constructing a complete portfolio with these funds to expresses specific sector views or investor requirements would, in practice, require multiple transaction costs in setting-up and rebalancing. The ProShares suite provides a solution in a single fund wrapper, making such strategies easily accessible.
The indices market-cap weight each component security according to the same rules as the S&P 500. The portion represented by the excluded sector is redistributed among remaining S&P 500 companies on a pro rata basis.
The ETFs, listed below, each have a 0.27% net expense ratio and have been listed on the NYSE Arca.
ProShares S&P 500 Ex-Energy ETF
ProShares S&P 500 Ex-Financials ETF
ProShares S&P 500 Ex-Health Care ETF
ProShares S&P 500 Ex-Technology ETF