PSQ
1x Short
ProShares Short QQQ
Shorts: NASDAQ-100 (QQQ)
Expense Ratio
0.95%
Leverage
1x Inverse
Issuer
ProShares
Inception
Jun 2006
Inverse ETF Risk
PSQ 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 PSQ Shorts
The ProShares Short QQQ (PSQ) ETF is designed to deliver the inverse (opposite) of the daily performance of the NASDAQ-100 Index. This index is heavily weighted toward large-cap technology and growth stocks, tracked by the popular Invesco QQQ Trust (QQQ).
PSQ achieves this inverse exposure through short positions in derivatives like swaps and futures contracts linked to the NASDAQ-100. It is rebalanced daily to target a -1x return of the index's daily movement.
Key Risks
- Daily Holding Risk: Designed for daily results only. Holding longer can cause returns to diverge significantly from the inverse of the index's cumulative return.
- Compounding Risk: Daily rebalancing in volatile markets can lead to compounded losses or eroded gains over time.
- High Expense Ratio: At 0.95%, the cost is high for an index ETF and can significantly drag on returns.
- Counterparty Risk: Relies on derivatives contracts with other financial institutions, exposing investors to potential default.
- Market Direction Risk: If the NASDAQ-100 rises, PSQ will lose value. It is a tactical tool, not a long-term investment.
Best Use Cases
- Short-Term Hedging: Used by investors to temporarily hedge an existing long portfolio against a potential downturn in tech/growth stocks.
- Tactical Bearish Bet: For sophisticated traders with a strong short-term conviction that the NASDAQ-100 will decline.
- Portfolio Diversification: To provide a measure of negative correlation to tech-heavy portfolios during market stress, though it is not a set-and-forget solution.
Similar Instruments
Frequently Asked Questions
Is PSQ a good long-term investment?
No. PSQ is designed for daily results only. Due to compounding effects and the cost of the fund, holding it for longer periods can lead to returns that drastically differ from the inverse of the index's long-term performance.
How does PSQ differ from shorting QQQ stock?
PSQ provides inverse exposure within an ETF structure, eliminating the need for a margin account, facing potential short-squeeze risks, or dealing with borrowing costs associated with directly shorting QQQ shares.
What is the main cost of owning PSQ?
The primary cost is the 0.95% expense ratio, which is deducted from the fund's assets. This is high relative to traditional index ETFs and is a significant headwind, especially in flat or trending markets.