Question · ETFs
ProShares Short Russell2000 (RWM) vs TWM and TZA
ProShares Short Russell2000, ticker RWM, shares its index with a -2x and a -3x cousin. The daily reset makes the three behave very differently once you hold past the first close.
Short answer
RWM, TWM and TZA all bet against the Russell 2000 one day at a time: RWM at -1x and TWM at -2x from ProShares, TZA at -3x from Direxion. RWM is the one to hold as a hedge for days or weeks. TWM and TZA suit trades of a day or two, since their gap from a simple multiple widens fast when small caps chop.
Put $9,000 into RWM, $4,500 into TWM or $3,000 into TZA, and for one session each position carries about the same bet against small caps.
The gain matches, and the cash outlay falls as the multiple rises. From the second session on, the three positions stop matching, because each fund resets to its multiple at every close, so the exposure inside the -2x and -3x positions swells after a winning day and shrinks after a losing one far faster than RWM’s does, and over a choppy week those gaps compound into results that no longer look like 1, 2 and 3 times anything.
Who runs each fund, and what is inside?
As of October 2026, the sponsors’ own fund pages describe them like this.
| Ticker | Fund | Sponsor | Daily objective | Benchmark | Inception (per sponsor) |
|---|---|---|---|---|---|
| RWM | ProShares Short Russell2000 | ProShares | -1x | Russell 2000 Index | Jan 23, 2007 |
| TWM | ProShares UltraShort Russell2000 | ProShares | -2x | Russell 2000 Index | Jan 23, 2007 |
| SRTY | ProShares UltraPro Short Russell2000 | ProShares | -3x | Russell 2000 Index | Feb 9, 2010 |
| TZA | Direxion Daily Small Cap Bear 3X ETF | Direxion | -3x | Russell 2000 Index | Nov 5, 2008 |
None of them owns small-cap stocks. ProShares lists swap agreements on the Russell 2000 with several large banks as the holdings of RWM and TWM, along with E-mini Russell 2000 futures and Treasury bills. Direxion says TZA gets its exposure through derivatives such as futures contracts and swaps. A swap is a contract with a bank. When small caps fall, the bank owes the fund; when they rise, the fund owes the bank, which leaves every one of these funds exposed to the chance that a counterparty fails to pay.
All four follow the same index. Direxion describes the Russell 2000 as roughly 2,000 small-capitalization companies drawn from the Russell 3000, and ProShares calls it a gauge of the small-cap segment of US stocks. If you want all three multiples from one sponsor, SRTY is the ProShares -3x fund, and every TZA sum below applies to it unchanged.
How far apart do they drift over three choppy days?
Start a hypothetical Russell 2000 at 100 and each fund at 100. Small caps fall 4%, bounce 5%, then fall 3%.
RWM kept about four-fifths of its simple multiple. TWM kept about two-thirds. TZA kept a little over half.
The -3x fund still made the most money, which hides the shortfall. Every fund hit its daily target on every day. TZA lost 15% on the bounce, and its 9% gain the next day worked on a smaller base, so the shortfall grew with the multiple. Stretch that back-and-forth pattern over several weeks and a -3x fund can finish below where it began even though small caps are lower, which is the outcome that catches first-time holders.
What if small caps fall in a straight line?
Two sessions, each down 3%.
Now every fund beat its multiple. Compounding pays on a one-way move. Which of the two tables your trade lands in depends on the path small caps take, and nobody knows that path in advance. The leveraged ETF decay calculator will run any sequence of daily moves you want to test, and volatility decay explains why the choppy case hurts.
Which fund suits which job?
RWM suits a hedge. If you own small-cap stocks and want to soften a decline for days or weeks without selling them, the -1x fund has the smallest drift, and its dollar moves track your portfolio closely enough to follow on a notepad. Sizing it against a portfolio’s beta is worked through in hedging small caps with RWM.
TWM sits between. Half the cash buys the same one-day exposure as RWM. It fits a short swing of a few sessions when you expect small caps to keep sliding, or a hedge for someone short of cash who is willing to re-size it often.
TZA is for a day or two, watched. Decide what one bad session may cost you, then size TZA to fit. The average true range of a Russell 2000 index fund, turned into a percentage of its price, tells you what a normal day looks like; triple it for TZA. If a typical day for the index spans 1.5% (a hypothetical figure), a typical day for TZA spans about 4.5%.
What does holding them cost?
Each fund charges an annual expense ratio, which the sponsor publishes on the fund page and can change. The swaps and futures inside the fund carry their own costs, and those land in the daily result you see. The larger cost for TWM and TZA is usually the drift worked out above, which grows with time held and with the size of the daily swings.
On taxes, ProShares notes that its funds, as registered investment companies, must pay out substantially all income and capital gains each year, so a distribution can arrive while you hold. Each sponsor posts tax details fund by fund, so read them before buying. Selling within a year of buying gives a short-term gain or loss. Situations differ.
For the other indexes and their bear funds, the inverse ETF list sets them side by side.
Questions traders ask next
Can you hold RWM for months as a hedge?
You can, as long as you keep checking it. RWM targets -1x for each day, so after weeks of choppy trading its result can differ from the Russell 2000's move turned upside down, and a falling market leaves it a larger share of your account. Re-size it on a schedule, or when it drifts past a band you set in advance.
Why did TZA lose money when the Russell 2000 barely moved?
Each day's result compounds on the previous close. A -3x fund drops three times the index's rise on up days and gains three times its fall on down days, and a run of alternating days leaves it lower even if small caps finish the stretch roughly unchanged. The bigger the daily swings, the faster that loss builds.
Is SRTY the same as TZA?
Both target -3x the daily performance of the Russell 2000. SRTY is a ProShares fund and TZA a Direxion fund, so the sponsor, the banks on the other side of the swaps, the fees and the trading volume differ. The daily arithmetic is the same for both.