1-Star ETFs Poised to Plunge: ProShares UltraShort MSCI EAFE

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the ProShares UltraShort MSCI EAFE (NYSE: EFU) have received the dreaded one-star ranking.

With that in mind, let's take a closer look at EFU and see what CAPS investors are saying about the ETF right now.

EFU facts



Oct. 2007

Total Net Assets

$7.7 million

Investment Approach

Seeks daily investment results that correspond to two times the inverse (-2x) of the daily performance of the MSCI EAFE Index. The index includes 85% of free float-adjusted market capitalization in each industry group in developed market countries, excluding the U.S. and Canada.

Expense Ratio


1-Year / 3-Year / 5-Year Return

(28%) / (26.6%) / (27.4%)


ProShares UltraShort S&P500 (NYSE: SDS)

Direxion Daily Small Cap Bear 3X Shares (NYSE: TZA)

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 90% of the 169 All-Star members who have rated ProShares UltraShort MSCI EAFE believe the ETF will underperform the S&P 500 going forward.

Just last week, one of those Fools, TerryHogan, succinctly summed up the bear case for our community:

First I kind of like EAFE [Europe, Australasia and Far East] for the next 15-20 years, barring nuclear war in the Korean Peninsula. Second, ultrashorts stink because they degrade over time with any sort of volatility. Third, there's an expense ratio that's going to eat into this thing with regularity.

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