ETF Database » BGU

Five ETF Strategies For A Sideways Market

Michael Johnston — Fri, 10 Jun 2011 14:00:56 +0000

Most investors have a pretty good idea which ETFs will perform well in bull markets (generally any type of risky asset, including equities and commodities) and which will perform well in bear markets (low risk bonds and inverse equity ETFs, among other asset classes). But finding products that have the potential to deliver meaningful gains when equity markets are moving sideways can be a more challenging task. The very nature of such an environment eliminates the vast majority of equity ETFs, and bond funds are also unlikely to show much movement when equities move along sideways. A 0% return on a portfolio is obviously preferable to the losses many experienced in 2008, but no growth can be tough to swallow. No one sets up a portfolio expecting it simply to tread water, and those with little in the way of patience may be frustrated by investments that simply spin their [...]

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Five Facts Every Investor Should Know About Leveraged ETFs

Michael Johnston — Thu, 30 Sep 2010 15:00:27 +0000

In recent years, few corners of the investing world have been the subject of as much controversy, misinformation, and confusion as the leveraged ETF space. Last summer these securities received widespread coverage from the financial media, much of it either implying directly or alleging that leveraged ETFs were flawed investment vehicles designed to dupe average investors out of their money. That prolonged debate over the merits of leveraged funds was somewhat frightening–it highlighted the ignorance of some well-respected publications–but the end result seemed to be an increased emphasis on investor education and a clearer understanding of what leveraged ETFs are and are not designed to do. Now it seems that conclusion may have been a bit naive. Some state securities regulators are including leveraged ETFs on their watch lists of “investor traps,” lumping them in with variety of investment scams. And recent stops on the conference tour have included some [...]

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ETF Ideas For A Flat Market

Jared Cummans — Mon, 16 Aug 2010 14:44:44 +0000

This year has been a frustrating one for investors, as equity markets came racing out of the gate only to lose steam as much anticipated job creation failed to materialize and much of the developed world found itself facing a massive credit crunch. Every development that seemingly indicates a robust recovery–such as the impressive earnings season–is quickly followed by more discouraging news to keep markets in check. Major U.S. indexes have spent part of 2010 well into positive territory while also dipping deep into the red, currently standing about even on the year. As the summer months draw to a close, many investors are beginning to predict that more sideways movement is in the forecast. There is a growing feeling that while there is not enough fuel for a upside rally, the situation is also not so bleak as to bring on a double dip recession. That creates a unique [...]

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The Shocking Truth About Leveraged ETFs

Michael Johnston — Mon, 05 Apr 2010 14:56:04 +0000

The SEC’s recent decision to take a closer look at the use of swaps and other derivatives by exchange-traded products and mutual funds has once again thrown leveraged ETFs under the microscope, as regulators begin examining the tools and strategies employed by these products to accomplish their objectives. During the study, approval of any ETFs that “particularly rely on swaps and other derivative instruments to achieve their investment objectives” will be halted, a move that will bring expansion of two of the fastest-growing corners of the ETF market–leveraged and active ETFs–screeching to a halt. The decision also brings back memories of last summer, when leveraged and inverse ETFs came under intense scrutiny for their performance during the tumultuous markets of late 2008 and early 2009. As the popularity of leveraged ETFs surged–several of these funds became among the most actively-traded securities in the world–some rather serious allegations were made surrounding [...]

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March ETF Roundup: Launches, Filings, and Closures

Seth Dowling — Thu, 01 Apr 2010 16:02:54 +0000

After a few speed bumps early in 2010, ETFs are back on track and traveling full steam ahead. In the first three months of 2010, nearly 60 new ETFs have been launched, which is already equivalent to nearly half funds to hit the market over the course of 2009. The recent SEC decision to halt approval on products using derivatives may slow this pace a bit, but April promises to be another very active month for new ETF launches. Below, we highlight some of the most interesting new funds hitting the market. New ETFs Highlights from the ETF industry in March include: Claymore, best known for themed ETFs and targeted sector funds, mixed things up when by releasing three new ETFs based on broad market indexes. The new funds include the Wilshire 5000 Total Market ETF (WFVK), Wilshire 4500 Completion Index ETF (WXSP), and Wilshire U.S. REIT ETF (WREI). Following the launch of 3x funds earlier in the year, Direxion hit [...]

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Direxion Brings 3x Leveraged ETFs To Europe

Michael Johnston — Wed, 31 Mar 2010 14:44:28 +0000

Direxion, the pioneer of 3x and -3x daily leveraged ETFs in the U.S., is going international. Beginning on March 31, six Direxion Shares Daily ETFs will be listed on the Amsterdam market of NYSE Euronext, significantly expanding the base of investors with access to these products. The Direxion ETFs available on this market include daily 3x and -3x ETFs targeting the MSCI Emerging Markets Index, Russell 1000 Index, and Russell 1000 Financial Services Index: Daily Emerging Markets Bull 3x Shares (EDC) Daily Large Cap Bull 3x Shares (BGU) Daily Financial Bull 3x Shares (FAB) Daily Emerging Markets Bear 3x Shares (EDZ) Daily Large Cap Bear 3x Shares (BGZ) Daily Financial Bear 3x Shares (FAZ) Each of these products is already listed in the U.S., and all but one of them trade under the same ticker symbol stateside (the 3x bull financial fund is listed as “FAS” in the U.S.). It’s [...]

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September Performance Debunks Leveraged ETF Myth

Michael Johnston — Wed, 07 Oct 2009 08:00:48 +0000

Over the last year, leveraged ETFs have been the subject of intense scrutiny from a number of parties, including regulatory agencies, state governments, broker-dealers, individual investors, and even class action lawyers. While several aspects of leveraged ETFs have been thoroughly analyzed and debated, perhaps no issue has drawn more attention than the effects of compounding returns when held for multiple trading sessions. Because most leveraged ETFs seek to provide amplified returns on a daily basis, they reset their exposure to the underlying benchmark on daily. As a result, the performance of leveraged ETFs over multiple trading sessions depends not only on the movement in the reference benchmark, but on the direction of the markets during that time period. In seesawing markets, returns can vary significantly in magnitude and even direction of changes in the fund’s reference index (see our Free Guide to Leveraged ETFs for a more thorough discussion). Unprecedented [...]

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How To Fix the Leveraged ETF Mess

Michael Johnston — Fri, 26 Jun 2009 11:00:28 +0000

Leveraged ETFs have quickly become the hot-button issue in the ETF industry, dividing investors and observers into two distinct camps. On the one side are sophisticated day traders who believe these funds, which use derivatives and other complex financial instruments to provide amplified daily returns on a target index, are the greatest thing since sliced bread. And on the other are those who accuse these ETFs of being fundamentally dishonest in nature – products that, in the words of legendary investor Jack Bogle, “verge on insanity.” Personally, I fall somewhere in between, believing that leveraged ETFs can be an incredibly powerful tool for sophisticated investors, but acknowledging that there exists the potential for these funds to be used in a detrimental manner by investors unaware of exactly how they function. And while I’m generally inclined to let things be, it’s becoming increasingly clear that this issue will not be going away any time soon [...]

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ProShares Files For More Leveraged Funds: Will The SEC Oblige?

Michael Johnston — Thu, 25 Jun 2009 05:05:56 +0000

ProShares, known for pioneering short and 2x leveraged and inverse leveraged ETFs, is once again blazing a new trail in the ETF industry. The fund family has filed for approval from the SEC to launch two new ETFs, a 3x S&P 500 fund and a 3x inverse S&P 500 fund. ProShares‘ proposed funds would be the first to offer leveraged ETF exposure to the S&P 500. ProShares is largely regarded as the market leader in the leveraged ETF arena, with dozens of funds offering 200% leverage (as well as 200% inverse leverage) on many popular indexes. Over the last year, however, ProShares has watched rival Direxion introduce numerous successful 300% funds, attracting significant inflows from the most sophisticated and adventurous investors. Now ProShares is looking to give Direxion a fight for day trader cash by offering leveraged exposure to one of the most widely-reported indexes in the world. Direxion already offers 3x [...]

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Canadian Regulators Respond to Leveraged ETFs

Michael Johnston — Thu, 18 Jun 2009 21:49:42 +0000

It’s good to know that we’re not alone. It seems our neighbors to the north are struggling with the issue of leveraged ETFs as well. Last week, the Investment Industry Regulatory Organization of Canada (IIROC) issued recommendations aimed at eliminating inappropriate use of these funds by investors unaware of their risk profiles and the manner in which they seek to generate their amplified returns. While the announcement indicated their concern regarding the issue, it’s unlikely to have any significant impact, and further underscores the difficulties these securities are posing to regulatory agencies. Leveraged ETFs, which seek to amplify the daily return on a benchmark index by a predetermined percentage (usually 200% or 300%) have been the subject of heated discussions in investment community lately. These ETFs are popular among day traders who use them to double or triple down on their predictions on short-term market movements. Winning bets can mean a [...]

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ETF Database » BGU

Five ETF Strategies For A Sideways Market

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Five Facts Every Investor Should Know About Leveraged ETFs

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ETF Ideas For A Flat Market

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The Shocking Truth About Leveraged ETFs

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March ETF Roundup: Launches, Filings, and Closures

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Direxion Brings 3x Leveraged ETFs To Europe

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September Performance Debunks Leveraged ETF Myth

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How To Fix the Leveraged ETF Mess

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ProShares Files For More Leveraged Funds: Will The SEC Oblige?

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Canadian Regulators Respond to Leveraged ETFs

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