WSJ vs. ProShares

The Wall Street Journal took another swipe at ProShares and other marketers of leveraged ETFs in the article REIT Moves Rub Executives Wrong Way.

Reporter Anton Troianovski writes that increased trading in REITs has caused an increase in stock price volatility. For example, in 35 out of 61 trading days since September 30– the Dow Jones Equity All REIT Index rose or fell 5% or more. Fifteen of those days saw moves of 10% or greater.

Real estate investment trusts typically see less action due to the long-term nature of real estate development and leasing.

According to Troianovski, REIT executives are blaming trading in leveraged ETFs for the large price swings in REITs. For example, the ProShares Ultra Real Estate (URE) fund and the ProShares UltraShort Real Estate (SRS) fund have both seen the volume levels hit yearly highs in December.

In response to a WSJ article earlier the month, ProShares Chief Executive Michael Sapir said that the idea that leveraged exchange-traded funds cause the end-of-day ups and downs in stock prices is “utter postulation.”

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