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Fund Times

Fund Times: ProFunds Group Files for 66 ETFs You Don't Need

Plus, news on global high-yield markets, Evergreen manager changes, and more.

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ProFunds Group recently filed with the SEC to offer 66 exchange-traded funds, greatly expanding the firm's lineup, as well as the total number of ETFs on offer overall. Unfortunately, the vast majority of the funds focus either on narrow industry sectors that would likely duplicate exposure for investors that have broadly diversified portfolios, or more specialized indexes that typical investors don't need to be involved with. The funds follow 22 strategies, with three different versions of each offering. The first strategy is designed to provide 200% of its benchmark's performance, the next to provide the inverse of the benchmark performance, and the final strategy is designed to provide negative 200% of benchmark results. We suggest most investors stay away.

High-Yield Issuance Increased in August
According to the Global High Yield Strategy reports out of Merrill Lynch this September, issuance of high-yield bonds has increased globally. In the month of August 2006, $13.3 billion in new bonds were issued, which is nearly triple the amount issued the month before, in July, and is about 80% higher than the amount a year prior. However, while more high-yield bonds came to market in August, this segment of the fixed-income world didn't lead the way in terms of performance. In a separate report, Merrill Lynch states that: "Performance fell right in line with quality, with higher quality triple-Bs outperforming all the way down to triple-C underperformance. Distressed bonds were the month's laggards," and overall 10-Year Treasuries and investment-grade debt beat high-yield bonds in a month it clearly didn't pay to take added credit risk.

Lawrence Jones does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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