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Rating:A $59B-AUM ETF Shop Celebrates a Decade and a Half Not Rated 5.0 Email Routing List Email & Route  Print Print
Thursday, August 19, 2021

A $59B-AUM ETF Shop Celebrates a Decade and a Half

Reported by Andrew Lusk, Associate Reporter

The team at ProShares, an ETF-oriented offshoot of the Bethesda, Maryland-based mutual fund provider ProFunds, recently celebrated fifteen years in the business.

Michael Lynn Sapir
ProShare Advisors, ProFund Advisors
ProFunds founder and ProShares CEO Michael Sapir recently talked with MFWire about the anniversary, reflecting on the firm's first 15 years in the ETF business and on what's to come.

"The firm was founded by myself and Louis Mayberg in 1997," Sapir says, "and since then, I've seen the company go through three phases in its history."

After Sapir worked with another fund firm (Rydex), in November of 1997 he and Mayberg launched ProFunds (reportedly with $100,000 in startup capital). Mayberg is now CEO of CyLogic, a cloud-oriented cybersecurity firm, and remains a principal at ProShares and ProFunds.

"During our first phase, we were a mutual fund company, and we started the company as ProFunds with three employees," Sapir notes. "Our mission was to free investors from the constraints of conventional investing by offering innovative mutual funds."

"By 2006, ProFunds had reached close to $9 billion in assets under management."

The second phase of the company began in June of 2006 when the team launched their ETF wing, ProShares.

"We had been working on launching ETFs since the early 2000s," Sapir says, "when the ETF industry was minuscule compared to what it is today."

He continues, "We wanted to take some of our mutual fund strategies and offer them in a tradeable wrapper. We thought there could be a market for that, but we had no idea how big it might be! Well, it turned out to be big, much bigger than the mutual fund market was."

"ProShares quickly overtook ProFunds in size and in short order," Sapir adds. "The third phase of the company began about six years ago when we got serious about offering buy-and-hold ETFs such as dividend growers, interest rate hedged, and thematics. That was like starting a new business for us, and now those funds are at nearly $15 billion in AUM."

"As of today, we manage over $65 billion in assets." ($59 billion of that is in ProShares' ETFs!)

In January, ProShares launched their first leveraged thematic ETFs, which Sapir says came about in the team's efforts to create new strategies which might appeal to buyers. "Product innovation is in our blood," he says, "and we listen to the marketplace. We think that more options for investors in the marketplace, in the end, will serve the best interests of educated investors."

"We're at an inflection point," he continues, "and we'll be exploring all sorts of things, including going into adjacent spaces from where we are now, [entering] partnerships and [making] acquisitions."

"As far as new products, we'll continue to be active in offering new funds. We recently introduced the first Bitcoin-focused 40-Act fund in the U.S., and we are ... potentially in a position to introduce one of the first Bitcoin ETFs."

Sapir notes, "Among other things, we intend to become leaders in thematic ETFs and plan to introduce significantly more funds in that space."

The past year and a half of COVID-19 has shaped the way business is done, Sapir says, but his team hasn't allowed that to slow them down.

"The way we've been working has changed significantly, and we've been remote since the start of the pandemic except for a skeleton crew back in the office."

"I've been amazed and quite pleased at how our people have adapted to a new way of doing business," he says, lauding his employees' resilience. "I hope, in the near future, that we'll be able to spend more time physically present with each other. I think that's better than being totally remote, as we are now."

"In the meantime, we've accomplished a tremendous amount as an organization during this period, and everything has operated smoothly."

The team looks forward to their next fifteen years in the world of ETFs, in addition to a continuation of the already-twenty-four-year expansion of ProFunds and ProShares, Sapir says.

Editor's Note: This article's description of ProFunds' founding has been updated. 

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