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ProShares launches first long/short Rafi ETF

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ProShares, a provider of alternative exchange-traded funds, has launched the ProShares Rafi Long/Short.

The ETF, the first dedicated fund that offers a long/short strategy based on Research Affiliates’ Fundamental Index methodology, is listed on NYSE Arca.

The Rafi approach uses fundamental measures of company size—sales, dividends, cash flow and book value—instead of security price in selecting and weighting securities.

The new ETF seeks to match the performance of the Rafi US Equity Long/Short Index before fees and expenses. The index takes long positions in companies with large Rafi weights relative to their capitalisation weights and short positions in companies with small Rafi weights relative to their capitalisation weights. By allocating an equal dollar amount to its long and short positions, the index is designed to generate an absolute return over a full market cycle.

“We are pleased to partner with Research Affiliates and Rob Arnott on ProShares Rafi Long/Short,” says Michael L. Sapir, chairman and chief executive of ProShare Advisors, ProShares’ investment adviser. “This ETF may appeal to investors looking for strategies that strive to deliver low correlation and favourable returns regardless of market direction.”

“Lifting the long-only constraint extends the potential benefits of the Rafi approach,” says Rob Arnott, founder of Research Affiliates. “We are excited that ProShares is providing access to another important alternative strategy for investors.”

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