Weathering China's Ups and Downs

Two new ProFunds satisfy both points of view

ProFunds has created two new mutual funds designed for investors who are bullish on Chinese stocks and for those who believe the Chinese market will plummet.

The new UltraChina ProFund offers the chance to get magnified exposure to the Chinese markets, ProFunds says. For investors who believe that they are due for a fall, UltraShort China ProFund is designed to go up when Chinese stocks go down.

"After several years of incredible performance in Chinese stocks, many experts are making the case for continued strong growth in China. Others have been talking of a bubble, and believe recent volatility may be a harbinger of worse to come," says Michael Sapir, chairman and CEO of ProFund Advisors LLC in a statement. "ProFunds is giving mutual fund investors tools that make it easy to act on either point of view," he says. "And because we don't restrict how often investors can trade ProFunds, it's also easy to adjust your exposure if that point of view changes."

According to Bethesda, Maryland-based ProFunds, the UltraChina ProFund is designed to provide twice the market exposure of an ordinary China mutual fund for the same investment. "The ProFund's objective is to double the daily performance of its benchmark, The Bank of New York China Select Index," ProFunds says in a release. "That means on days when the index rises by 1%, UltraChina ProFund should rise by 2%, before fees and expenses. Conversely, its net asset value should lose approximately 2% if the index falls 1% on a given day."

When Chinese markets dip, investors can seek profit or seek to hedge existing positions in Chinese equities with UltraShort China ProFund. "The ProFund is designed to double the daily inverse performance of its benchmark, The Bank of New York China Select Index," ProFunds says. "So on days when the index goes down by 1%, the fund should increase by 2%, before fees and expenses. And on days when the index rises by 1%, the fund should decrease by 2%."

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