10-Q: ProShares Trust II Q2 2026 Filing Shows Mixed ETF Performance

ProShares Trust II's Q2 2026 filing reveals mixed performance across its suite of ETFs, with leveraged and inverse ETFs experiencing significant volatility and net losses, while others show modest gains.

Summary

• ProShares Trust II filed its Q2 2026 report, detailing the financial performance of its various ETFs.
• Several leveraged and inverse ETFs, particularly those tracking VIX futures, crude oil, natural gas, gold, and silver, reported substantial net losses and significant unrealized depreciation.
• For instance, ProShares Ultra Silver reported a net loss of $799 million for the quarter, and ProShares Ultra VIX Short-Term Futures ETF reported a net loss of $248 million.
• Conversely, some funds, like ProShares UltraShort Bloomberg Crude Oil, reported significant net income, driven by inverse performance against a declining benchmark.
• The filing highlights the inherent risks of leveraged and inverse ETFs, particularly the impact of compounding and volatility on returns over periods longer than a single day.
• The company also noted the ongoing impact of geopolitical events and market volatility on its investment strategies and performance.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to significant unrealized depreciation across multiple funds and substantial net losses reported by several leveraged ETFs, indicating challenging market conditions for these specific investment vehicles.

Positives

• ProShares UltraShort Bloomberg Crude Oil reported a net income of $102.5 million for the three months ended June 30, 2026, driven by inverse performance against a declining crude oil market.
• ProShares UltraShort Gold reported a net income of $27.5 million for the three months ended June 30, 2026, reflecting positive performance in its inverse strategy.
• ProShares UltraShort Bloomberg Natural Gas reported a net income of $28.7 million for the three months ended June 30, 2026.
• ProShares Ultra Yen showed a positive net income of $2.1 million for the three months ended June 30, 2026, despite a decline in its benchmark.
• ProShares UltraShort Euro reported a net income of $1.2 million for the three months ended June 30, 2026.

Negatives

• ProShares Ultra Silver reported a significant net loss of $799 million for the three months ended June 30, 2026, and a net loss of $1.15 billion for the six months ended June 30, 2026.
• ProShares Ultra VIX Short-Term Futures ETF reported a net loss of $248.5 million for the three months ended June 30, 2026, and a net loss of $91.7 million for the six months ended June 30, 2026.
• ProShares Ultra Bloomberg Natural Gas reported a net loss of $24.6 million for the three months ended June 30, 2026.
• ProShares Ultra Gold reported a net loss of $237.4 million for the three months ended June 30, 2026.
• ProShares VIX Short-Term Futures ETF reported a net loss of $96 million for the three months ended June 30, 2026.
• ProShares UltraShort Bloomberg Crude Oil reported a net loss of $50.1 million for the six months ended June 30, 2026.
• ProShares UltraShort Bloomberg Natural Gas reported a net loss of $25.7 million for the six months ended June 30, 2026.

Risks

• Leveraged and inverse leveraged ETFs carry significant risks, including the potential for total loss of investment, especially over periods longer than a single day due to compounding effects.
• The performance of the Funds can differ significantly from the stated multiple of their benchmarks due to compounding, especially in volatile markets or over longer holding periods.
• Market disruptions, illiquidity, and counterparty credit risk can adversely affect the Funds' ability to meet their investment objectives and may lead to significant losses.
• The Funds are subject to commodity price risk, exchange rate risk, and equity market volatility risk, depending on their respective benchmarks.
• The use of futures contracts, swap agreements, and forward contracts exposes the Funds to market risk and the risk of counterparty default.
• Extraordinary contango or backwardation in futures markets can lead to significant losses for the Funds.
• Natural disasters, public health crises (like pandemics), and geopolitical conflicts can cause extreme market volatility, illiquidity, and negatively impact Fund performance.
• Regulatory changes, such as potential restrictions on complex products, could impact investors' ability to buy Shares in the Funds.

Future Outlook

The filing does not contain specific forward-looking statements or guidance for future periods. However, the nature of the leveraged and inverse ETFs implies that future performance will be highly dependent on the daily movements of their respective benchmarks and the impact of compounding, making future returns highly uncertain and potentially volatile.

Management Comments

• Shareholders who invest in the Geared Funds should actively manage and monitor their investments, as frequently as daily.
• The Funds do not seek to achieve their stated investment objectives over a period of time greater than a single day because mathematical compounding prevents the Geared Funds from achieving such results.
• The Sponsor attempts to minimize certain of these market and credit risks by normally: executing and clearing trades with creditworthy counterparties, as determined by the Sponsor; limiting the outstanding amounts due from counterparties to the Funds; not posting margin directly with a counterparty; requiring that the counterparty posts collateral in amounts approximately equal to that owed to the Funds, marked to market daily, subject to certain minimum thresholds; limiting the amount of margin or premium posted at a FCM; and ensuring that deliverable contracts are not held to such a date when delivery of the underlying asset could be called for.

Industry Context

StockSavvy.ai notes that the performance of these leveraged and inverse ETFs is highly sensitive to daily market movements and compounding effects, making them distinct from traditional buy-and-hold investments. The significant losses reported by several funds highlight the risks associated with these complex products, particularly in volatile market environments.

Comparison to Industry Standards

• The performance of leveraged ETFs like ProShares Ultra Silver (-41.7% per share NAV change for Q2 2026) and ProShares Ultra VIX Short-Term Futures ETF (-52.4% per share NAV change for Q2 2026) significantly underperformed broader market indices and traditional ETFs during the period.
• The inverse ETFs, such as ProShares UltraShort Bloomberg Crude Oil (+70.5% per share market value change for Q2 2026) and ProShares UltraShort Gold (+33.7% per share market value change for Q2 2026), demonstrated strong positive returns, aligning with their inverse objectives as their respective benchmarks declined.
• The expense ratios for most of these ETFs range from 0.95% to 1.61%, which are generally higher than those of passive index ETFs, reflecting the costs associated with managing complex derivative strategies.

Related Party Transactions

• ProShares Trust II invests a portion of its cash balances in the ProShares GENIUS Money Market ETF, an affiliated exchange-traded fund, for cash management and liquidity purposes.
• The Sponsor pays fees and expenses for various services, including administration, custody, and distribution, which are borne by the Funds.
• The Sponsor pays brokerage commissions on VIX futures contracts for the Matching VIX Funds that exceed variable create/redeem fees collected.

Stakeholder Impact

• Shareholders in leveraged ETFs experienced significant declines in their investment values during the quarter, particularly those holding ProShares Ultra Silver and ProShares Ultra VIX Short-Term Futures ETF.
• Investors in inverse ETFs such as ProShares UltraShort Bloomberg Crude Oil and ProShares UltraShort Gold saw positive returns, benefiting from the decline in their respective benchmarks.
• The complex nature of these ETFs and the risks associated with compounding and volatility mean that investors need to actively monitor their investments to align with their risk tolerance and investment goals.

Next Steps

• Continue to monitor the performance of the leveraged and inverse ETFs in relation to their respective benchmarks.
• Assess the impact of market volatility and compounding effects on the Funds' long-term returns.
• Review any potential regulatory changes that may affect the trading or accessibility of these complex products.

Key Dates

Recommendation

The filing presents a mixed picture, with significant losses in several leveraged ETFs due to market volatility and compounding effects, while inverse ETFs performed well. The inherent risks of these products, particularly for longer-term holding periods, suggest a cautious approach. For investors already in inverse ETFs that performed well, holding might be appropriate if the market trend continues. For leveraged ETFs that experienced significant losses, holding might be considered for those with a high risk tolerance and a belief in a market reversal, but a 'hold' recommendation reflects the uncertainty and risk rather than a strong conviction for buying or selling.

Keywords

VIX Futures, Crude Oil Futures, Natural Gas Futures, Gold Futures, Silver Futures, Currency Forward Contracts, Leveraged ETFs, Inverse ETFs