EFZ 1x Short
ProShares Short MSCI EAFE
Shorts: Developed Markets (EFA)
Expense Ratio
0.95%
Leverage
1x Inverse
Issuer
ProShares
Inception
Oct 2007
EFZ ETF Fact Check
| What it is | EFZ is ProShares Short MSCI EAFE, an inverse ETF tied to Developed Markets (EFA). |
|---|---|
| Daily target | 1x Inverse exposure before fees, expenses, tracking error, and daily compounding effects. |
| Cost check | Expense ratio shown here: 0.95%. Verify the latest fee, holdings, and prospectus on the issuer page before trading. |
| Holding-period check | Even 1x inverse ETFs reset daily, so longer holding periods can diverge from the simple inverse index move. |
Source checks: ProShares ETF pages for current fund documents and the SEC/FINRA leveraged and inverse ETF bulletin for daily reset risk. Inception shown here: Oct 2007.
Inverse ETF Risk
EFZ is an inverse ETF designed for short-term hedging and trading. It resets daily and may not track the inverse of its index over longer periods.
What EFZ Shorts
The ProShares Short MSCI EAFE (EFZ) is designed to deliver the inverse (opposite) of the daily performance of the MSCI EAFE Index. This index tracks large- and mid-cap stocks across developed markets in Europe, Australasia, and the Far East, excluding the U.S. and Canada.
EFZ achieves its goal primarily through short positions in EFA (the iShares MSCI EAFE ETF) or other derivatives like swaps and futures. It resets its exposure daily, making it suitable for short-term tactical positions.
Key Risks
- Daily Reset Risk: Holding periods longer than one day can result in returns that deviate significantly from the inverse of the index's cumulative return, especially in volatile markets.
- Compounding Risk: The daily rebalancing can lead to compounding effects, which may erode returns over time.
- Market Risk: If the underlying MSCI EAFE Index rises, the value of EFZ will decline.
- Counterparty Risk: The fund uses derivatives like swaps, exposing it to the risk that the other party in the contract may default.
- High Expense Ratio: At 0.95%, the cost of holding the fund can significantly impact net returns over time.
Best Use Cases
- Short-Term Hedging: Temporarily hedge a long portfolio of international developed market stocks against a potential downturn.
- Tactical Bearish Bet: Express a short-term, bearish view on developed international equity markets.
- Portfolio Diversification: Used strategically to reduce overall portfolio correlation to non-U.S. developed markets.