NextFin News - ProShares, the Bethesda-based firm that built a $120 billion business on exchange-traded funds, is stepping outside the ETF wrapper for the first time in its two-decade history. On Sept. 9, 2026, the company announced a new Active Investments platform that will house a planned lineup of interval funds — semi-liquid vehicles that can hold private credit, private equity, and real assets that cannot be packaged into daily-traded ETFs. The move is a bet that the same self-directed retail investors who flocked to its leveraged, dividend, and crypto ETFs will reach for private-market income through a fund that only lets them sell a slice of their holdings each quarter.
The timing is not accidental. ProShares and its mutual-fund affiliate ProFunds managed more than $111 billion as of Aug. 31, 2026, and Chief Executive Michael L. Sapir said the company recently reached close to $120 billion in assets under management. That scale is a triumph of the ETF model — and also its ceiling. The firm's flagship strategies, from geared index funds to dividend growers, compete in an industry where the average ETF expense ratio has been driven down to roughly 23 basis points and where index equity ETF fees have fallen 33% over the past nine years, according to Investment Company Institute data. In that environment, growth increasingly means selling something the ETF wrapper cannot hold.
The Announcement: A New Platform, Not a Pivot
The new Active Investments platform will combine investment research with specialized portfolio management and serve as the home for the planned interval funds. To staff it, ProShares named five senior executives, led by Alessio de Longis as managing director, head of research and chief investment officer of Active Investments. De Longis joins from Invesco, where he oversaw a global multi-asset platform with approximately $100 billion in assets.
"By combining rigorous investment research, thoughtful portfolio construction, and disciplined portfolio management, we can develop innovative active investment solutions that help meet investors' evolving needs," de Longis said.
The firm also hired Hyuk Soo Han as senior portfolio manager for private equity, formerly a principal on GCM Grosvenor's private equity team; Inkoo Kang as executive director of tactical products, from Grayscale and Direxion; and two product-development executives from BlackRock, Joseph Witkowski and Nicholas Georgakis. ProShares said it has more than 20 open positions and expects additional recruitment across portfolio management, research, and product development.
Sapir framed the expansion as the company's next phase rather than a departure from ETFs. "Now we are taking the business to its next level of growth," he said. "The significant new talent we've brought on is central to that effort."
The company has already tested these waters. A ProShares Private Equity Access Fund filed a draft registration statement in 2025 outlining investments across buyout, growth capital, special situations, venture capital, private infrastructure, and real estate, with both primary and secondary commitments. The draft prospectus did not yet specify a management fee — a sign that product details are still being worked out even as the platform is built.
Why an ETF Shop Cannot ETF Its Way Into Private Markets
The core reason ProShares needs a new vehicle is structural, not strategic. An ETF must price and trade continuously, and its authorized-participant creation-and-redemption mechanism requires the underlying portfolio to be liquid enough to assemble and dismantle in kind every day. Private credit loans, venture-capital stakes, and direct real estate do not clear on a daily market. Place them inside an ETF and the fund's quoted price would detach from assets that cannot be sold at that price — a recipe for the kind of premium-and-discount dislocation that plagues traditional closed-end funds holding illiquid assets.
Interval funds solve that mismatch by matching the liquidity of the liabilities to the liquidity of the assets. Under SEC Rule 23c-3, interval funds are closed-end investment companies that make repurchase offers only at quarterly, semiannual, or annual intervals, with each offer sized between 5% and 25% of outstanding shares. If repurchase requests exceed the offer amount, the fund must accept shares on a pro rata basis — though it may increase the offer by up to 2 percentage points to handle oversubscription without proration. Shares typically do not trade on a secondary market; they are bought and sold only with the fund, at net asset value.
The trade-off is explicit: investors gain access to higher-yielding, less-liquid assets, and in exchange they surrender the right to exit on demand. For ProShares, the interval structure is the only regulated, continuously offered wrapper that can hold the assets it now wants to sell. The firm is not abandoning daily liquidity where daily liquidity works; it is adding a slower vehicle where slower is the only honest option.
The Fee War Behind the Strategy Shift
There is a second, less romantic driver: economics. ProShares's geared and inverse ETF franchise — one of the largest such lineups in the industry, with more than $95 billion in assets — commands fees well above the index-fund average because it sells a trading tool rather than cheap beta. But the broader ETF industry's race to zero has compressed what a passive-heavy asset manager can earn on incremental dollars. The Investment Company Institute reports that from 1996 to 2025, average expense ratios fell 62% for equity mutual funds and 57% for bond mutual funds, with index equity and bond ETF fees down 33% and 50%, respectively, over the past nine years.
Interval funds, by contrast, price like active strategies, not like beta. A typical interval fund charges a management fee in the range of 1% to 1.5% or more, plus distribution costs — multiples of the 23-basis-point industry average ETF fee. For an asset manager, the revenue math is straightforward: moving a retail client from a 0.30% ETF into a 1.25% interval fund quadruples the fee on that dollar without requiring four times the service. That is not an indictment; it is the incentive structure that explains why every major house — Blackstone, KKR, Apollo, Goldman Sachs, T. Rowe Price — is building the same retail-alternatives channel at the same time.
ProShares is not immune to that arithmetic. Its autocallable-income and high-income ETFs already sit at the higher-fee end of the exchange-traded spectrum, and the new platform extends the logic into assets where fee compression cannot reach because there is no liquid benchmark to undercut.
The Retail Channel Is the Real Prize
The third reason is distributional. ProShares already owns relationships with millions of self-directed investors through brokerage accounts. Its ETFs trade like stocks, so its customer base is wired for a ticker and a click. Interval funds have traditionally been sold through financial advisors with high minimums and accreditation requirements. By packaging private strategies in interval funds with low minimums, ProShares can route them through the same retail plumbing that made its ETF franchise.
The industry is moving in the same direction. Goldman Sachs and T. Rowe Price recently debuted an interval fund with a $2,500 minimum and no accreditation requirement. Neuberger Berman launched its first interval fund in August 2025 to bring private credit to individual investors. The message from every major asset manager is the same: the next wave of private-market growth will come from retail wallets, not institutional mandates.
The numbers behind that belief are large. The interval and tender-offer fund market reached roughly $247 billion in net assets by mid-2026, growing at a 25% to 30% annual rate, according to industry data compiled by Interval Fund Tracker. XA Investments put the market at $233 billion in net assets as of the end of 2025, up 35% from $172 billion a year earlier, with assets nearly quadrupling from $18.6 billion in 2020 to $93.4 billion in January 2025. Private credit itself has grown to more than $2 trillion in assets under management globally, according to PwC's 2026 Private Credit Survey, which forecasts the market could reach $3.4 trillion by 2030.
ProShares is late to the party, but it arrives with a brand retail investors already recognize and a distribution model built for them.
The Risk Hidden Inside 'Quarterly Liquidity'
The announcement does not say how ProShares will handle the central tension of every semi-liquid fund: what happens when too many investors want out at once. Rule 23c-3's 5% floor is a minimum, not a promise — a fund can offer exactly 5% and still leave 95% of shares locked between windows. Requests are filled pro rata when demand exceeds supply. Investors who ask for more get a partial fill, and the remainder is canceled, not deferred.
The risk is not theoretical. On June 3, 2026, Partners Group imposed a redemption gate on its Global Value SICAV, a Luxembourg-domiciled private-equity evergreen fund with $8.6 billion in net assets at the end of March 2026, after quarterly redemption requests reached about 9.8% of net asset value, nearly double the fund's 5% contractual cap. Investors who submitted requests received approximately 62 cents on the dollar, with the remaining 38% canceled outright rather than queued for the next window. Three other mature evergreen funds, with a combined $9.7 billion, were estimated to see second-quarter redemptions between 3.5% and 5% — at or near their caps.
Partners Group said in a June 2026 statement that its evergreen vehicles "are typically equipped with liquidity limits of up to 5% of NAV per quarter, and that these limits would be enacted whenever redemption activity reached the designed threshold."
"Quarterly liquidity" is not the same thing as "on-demand liquidity," and the difference only becomes real in a stressed quarter. Any retail investor who has traded a ProShares ETF intraday will need to relearn that lesson — and ProShares will need to teach it without damaging the trust its brand has earned.
Cyclical Tailwind, Structural Shift
This is both a cyclical move and a structural one, and the two should be separated — because they point to different holding periods and different risks.
The cyclical case is about timing. With interest rates elevated and equity valuations stretched, income-hungry retail investors are searching for yield beyond bonds and dividend stocks. Private credit's floating-rate loans pay more when rates are high, and interval funds have ridden that demand. If rates fall, that yield advantage compresses and the cyclical tailwind weakens. The flow chase into semi-liquid funds is partly a rate-cycle phenomenon, and rate cycles turn.
The structural case is about plumbing. The regulatory wrapper, 1099 tax reporting instead of K-1s, low minimums, and broker-dealer platforms that can now hold these shares did not exist at scale a decade ago. Those are infrastructure changes, not sentiment. Even if private-credit spreads tighten, the channel for selling private assets to non-accredited investors is now built and will not be un-built. ProShares is betting on the channel as much as on any single asset class.
What to Watch — and What Would Prove the Thesis Wrong
Three scenarios frame the next 18 months.
Base case. ProShares launches one or two interval funds — most likely a private-credit income strategy, given retail demand for yield — with a $2,500 to $5,000 minimum and a quarterly 5% repurchase offer. Assets build slowly through its existing retail relationships, and the platform becomes a modest but real second revenue pillar alongside the ETF business. The structural thesis holds: the channel works, but it is a marathon, not a land grab.
Upside case. A risk-off quarter in public markets sends retail investors hunting for uncorrelated income, interval-fund inflows accelerate, and ProShares's recognizable brand captures share faster than expected. The company uses the platform as a springboard into partnerships with external managers, accelerating entry into asset classes it does not yet staff. In this scenario the structural channel proves deeper than the skeptics expect.
Downside case. A credit event widens private-credit spreads and triggers a wave of redemption requests across the industry. Repurchase offers across multiple interval funds land at or near the 5% floor, proration becomes normal rather than exceptional, and retail investors — conditioned by ETFs to expect instant exits — react badly. Net flows turn negative for two consecutive quarters. In that world, ProShares's expansion would be chasing a trend that peaked, and the brand damage could spill back into its core ETF franchise.
The falsifying signal is quantifiable: if interval-fund net flows turn negative for two consecutive quarters while repurchase proration rates remain near zero, the retail channel is not as deep as managers believe. A second warning sign would be a fee war that compresses interval-fund economics toward ETF levels, stripping out the revenue needed to support active private-markets teams.
The short-term signals to watch are the launch details — asset class, fee, minimum investment, and repurchase terms — followed by whether ProShares can convert ETF customers into interval-fund holders without a traditional sales force. The medium-term question is credibility: can a firm known for daily-traded index products build trust in active, illiquid management?
ProShares spent 20 years teaching retail investors to trade liquidity by the second. Now it is asking them to give some of it up — and the success of this expansion will be measured not by how many assets it raises, but by how well it explains that trade before the first gate opens.
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