Leveraged ETFs have taken a beating in the financial presses lately, mostly the result of misconceptions about the intended uses and users of these funds. Most of the criticism has focused on the performance of leveraged ETFs when held for multiple trading sessions. Because leveraged ETFs seek to amplify the return on their underlying benchmarks on a daily basis, the returns generated by leveraged ETFs over time do not depend solely on the change in the underlying index, but in its volatility and the direction of the market as well. [click to continue…]
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 [...]
by Andy H on April 27, 2009 | Updated August 31, 2009
In the past few years the interest in leveraged ETFs has skyrocketed. With this new level of interest, so too has criticism of these funds increased. The truth is however most financial products, Mr. Madoff aside, aren’t “good” or “bad”–they’re appropriate for some goals, and inappropriate for other goals. Let’s take a look at leveraged [...]
