If You Invested in ProShares Nasdaq-100 Dynamic Buffer ETF (QB)

ProShares Nasdaq-100 Dynamic Buffer ETF (symbol QB) is an exchange-traded fund introduced by ProShares as part of a group of Dynamic Buffer ETFs. According to ProShares, this fund is based on a patent-pending methodology that seeks to provide exposure to a broad U.S. equity benchmark while targeting a defined level of downside protection and a cap on upside participation. QB is designed for investors who want access to equity market returns with a rules-based approach to limiting a portion of daily losses.

The fund is described as allowing investors to capture gains on days when the underlying index rises, up to a specified daily cap, while targeting protection against a range of the first 1% to as much as 5% of losses on days when the index declines. Both the targeted downside protection (the buffer) and the upside cap are intended to adjust in response to expectations of market volatility. When expected volatility is higher, the methodology targets a larger buffer and a higher cap; when expected volatility is lower, the targeted buffer and cap are reduced accordingly.

QB’s strategy is implemented through what ProShares calls a Dynamic Daily Buffer Strategy. This approach combines long exposure to an underlying broad-based index with both long and short options on that index that have one day to expiration. The combination of these positions is intended to shape the fund’s daily return profile so that it participates in index gains up to the daily cap while seeking to mitigate a specified range of daily losses up to the target buffer. The fund may underperform its underlying index over shorter or longer periods, and ProShares notes that there is no guarantee the strategy will achieve the targeted buffer or upside participation.

The buffer and cap are reset each business day based on expectations of market volatility. As a result, the outcomes that the strategy seeks to provide are measured from the close of one business day to the close of the next. ProShares emphasizes that shares traded during the day should not be expected to achieve the same investment outcome as the ETF’s daily close-to-close objective, and that shares bought or sold after the cap or buffer have been reached on a given day should not expect to benefit from those levels for that day.

ProShares notes that its ETFs, including the Dynamic Buffer series, entail risks associated with the use of derivatives such as swap agreements, futures contracts and similar instruments, as well as risks related to imperfect benchmark correlation and market price variance. These factors can increase volatility and reduce performance relative to the underlying index. ProShares ETFs are generally non-diversified, and investing in them involves the risk of loss of principal.

The Nasdaq-100 name and related index references associated with QB are used under license from Nasdaq, Inc. ProShares discloses that the index providers and related entities do not sponsor, endorse, sell or promote ProShares ETFs and do not make any representation regarding the advisability of investing in them. ProShares also highlights that investors should review the fund’s summary and full prospectuses for detailed information about investment objectives, risks, charges and expenses.

QB is part of a broader lineup of ProShares ETFs that, according to the company, includes strategies linked to areas such as crypto-linked exposure, dividend growth, interest rate hedged bond approaches and geared (leveraged and inverse) investing. The introduction of the Dynamic Buffer ETFs, including ProShares Nasdaq-100 Dynamic Buffer ETF, reflects ProShares’ stated focus on creating products that offer both strategic and tactical tools for investors who want to manage risk and shape their participation in equity markets.