Some investment strategies are more hype than strategy. Too many of today’s exchange-traded funds fall into that category. But is ProShares 130/30 ETF (NYSE:CSM) one of them?

Was it worth it? It has been nearly two months since ProShares released its 130/30 ETF (NYSE:CSM) based on the Credit Suisse index with the same name. Has the popular strategy been able to beat the overall market as so many investors had hoped for? Or is it yet another flimsy hype-driven ETF?

When the strategy first became popular, it was the talk of many investing circles. It was so popular, the ETF world could not resist creating a fund of its own. Now investors want to know if the increased leverage and expense of long-short strategy is worth it.

For a glimpse of the recent action, here’s a chart:

As you can see, the ETF holds up to its name and does indeed outpace the market. If you had bought shares at the inception and would sell them now, you would be ahead of the S&P 500. But not by much.

Any time we discuss ETFs or mutual funds, the first thing question you need to ask is, “What is this thing going to cost me?”

After all, it takes lots of people buying and selling stocks and pushing paper to run an ETF. And until Washington gets its way, none of them do it for free.

Too much for too little

Currently, the 130/30 ETF posts an expense ratio of 0.95%, not super expensive in the world of funds, but not cheap, either. The fee is an instant handicap for a fund that is fighting to beat a tough benchmark like the S&P 500.

Really, this ETF is the lazy man’s way of taking advantage of an otherwise sound strategy. If you cannot afford the time or don’t have the investment portfolio of the size needed for a high-quality 130/30 portfolio, you are better off buying a simple, cheaper market-based fund.

If, on the other hand, you can handle the rigorous research and trading involved in the strategy, chances are you will be able to outpace the benchmark by wider margins on your own.

To really outshine the markets, your investments need to be on the tails of the market curve. An index-based ETF like this one does not offer the leverage most 130/30 investors are truly after.

Once again, the ProShares 130/30 ETF is a marketer’s dream come true, but offers little that investors could not find elsewhere at a much better price.

Source: 130/30 ETFs: All Hype and No Reward?