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Pump Up Your Foreign Equity Exposure for Less Cash
Or reduce exposure without selling
Powerful market rallies abroad have sparked growing interest in investment opportunities outside the United States. If you're seeking to gain exposure to these foreign markets, consider four new ProFunds.
UltraInternational ProFund and UltraShort International ProFund seek to provide magnified long and short exposure (gains, losses and volatility), respectively, to the Morgan Stanley Capital International Europe, Australasia and Far East (MSCI® EAFE®) Index.1
UltraEmerging Markets ProFund and UltraShort Emerging Markets ProFund seek to provide magnified exposure—long and short—to The Bank of New York Emerging Markets 50 ADR Index (BNY EM 50 ADR Index). This index is a capitalization-weighted index designed to track the performance of a basket of emerging market depositary receipts.
The ProFunds difference
Today, mutual fund investors have many choices for international investing, but four new ProFunds offer some advantages over traditional international funds.
Double your exposure. With UltraInternational ProFund and UltraEmerging Markets ProFund, you can magnify the impact of your investment dollar (gains, losses and volatility). That's because the funds use leveraged investment techniques to seek daily investment results (before fees and expenses) that either correspond to twice the daily performance or double the inverse of the daily price movement of their benchmark indexes.
Suppose you're bullish on prospects for emerging markets. A $50,000 investment in a traditional U.S-based emerging market equity mutual fund would provide $50,000 of initial exposure. With the same $50,000 investment in UltraEmerging Markets ProFund, you'd get $100,000 of initial exposure.
Or, if you're seeking obtain a certain target exposure to emerging markets, you can invest less money than a traditional fund requires to obtain that same exposure. This would free up capital to pursue other opportunities.
Reduce exposure. Unlike traditional funds, the new UltraShort ProFunds seek to go up when foreign markets go down. These ProFunds can be used to reduce your exposure to foreign equities without selling existing holdings.
Suppose you hold shares of an international fund that invests in developed markets, and it has increased in value to the point where it is overweighted in your portfolio.
You want to bring your portfolio back in line, but don't want to sell shares because of the tax consequences and possibility of being hit with redemption fees. An investment in UltraShort International ProFund can reduce your exposure to the overweighted position. The ProFund should experience losses if the original position increases in value.
It's important to remember that the fund has fees and expenses of its own, and exchanges may also have tax consequences (consult your tax adviser).
Flexibility to change. As with all ProFunds, the new foreign equity ProFunds provide you with the flexibility to shift your investments as you see market conditions changing. There are no limits on the number of exchanges among the more than 50 ProFunds (again, exchanges may have tax consequences).
These ProFunds involve certain risks, including aggressive investment technique, correlation, financial instruments, foreign currency, liquidity, market and non-diversification risks. See the prospectus for a complete description of these risks. All ProFunds permit active investment strategies which can decrease performance and increase expenses.
ยน UltraInternational and UltraShort International ProFunds determine their success in meeting their investment objectives by comparing their daily returns on a given day with the daily performance of the MSCI EAFE futures contracts traded in the United States. The performance of these futures contracts may vary from the performance of the MSCI EAFE Index.
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