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ProShares launches first US equity ETF specifically designed to outperform in a rising rate environment


ProShares has launched ProShares Equities for Rising Rates ETF (EQRR), the first US equity exchange traded fund specifically designed to outperform traditional large-cap indexes, such as the S&P 500, in a rising interest rate environment.

The fund is benchmarked to the Nasdaq US Large Cap Equities for Rising Rates Index and is listed on the Nasdaq exchange.
“EQRR is for investors who expect rising interest rates and want to outperform traditional large-cap indexes as rates go up,” says Michael L Sapir, co-founder and CEO of ProShare Advisors, LLC, the advisor to ProShares. “EQRR takes those sectors most positively correlated with interest rates, then within those sectors invests in the companies that have tended to outperform during periods of rising rates.”
The fund seeks to track the performance of the Nasdaq US Large Cap Equities for Rising Rates Index. The index methodology starts with the 500 largest listed US stocks and selects the five US large-cap sectors that have most recently demonstrated the highest correlation to weekly changes in 10-year US Treasury yields. It then identifies the top 10 stocks in each sector that have the highest correlation of relative performance—versus 500 of the largest listed US stocks – to changes in the 10-Year yield. Stocks in sectors with a higher correlation to rising rates have a heavier weighting in the index. This process is repeated quarterly to maintain a portfolio of 50 stocks. The resulting portfolio aims to provide relative outperformance compared to traditional large-cap indexes during periods of rising US Treasury interest rates.

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