ProShares, the issuer responsible for pioneering leveraged and inverse ETFs, has filed prospectuses for 16 new funds. Expansion is nothing new for ProShares–the company has launched a handful of new ETFs over the last year–but the filing was interesting because it detailed plans for 300% leveraged ETFs. ProShares’ current product line, which consists of more than 90 funds, includes only two ETFs with 300% leverage, the UltraPro S&P 500 (UPRO) and UltraPro Short S&P 500 (SPXU). [click to continue…]
Leveraged ETFs were in the headlines a great deal in 2009, but most of the coverage was less than favorable. Misinformation on these products was widespread throughout the year, leading to confusion on many aspects of these products and some unfair generalizations.
One of the primary points of discussion was the performance of leveraged ETFs when held by investors for extended periods of times. Because these funds focus on delivering amplified returns on a daily basis, returns over time are compounded, meaning that the effective return over multiple sessions depends not only on the change in the underlying benchmark, but in the path of the index during that period. In trending markets, the return to leveraged ETFs will generally be greater than the simple target multiple times the return on the underlying index. But in seesawing markets — one where gains are frequently followed by losses and vice versa — the compounding of returns can cause erosion of returns to investors who buy and hold. [click to continue…]
With sluggish growth forecasted for the next few quarters an unemployment rate quickly approaching 10%, many U.S. investors are looking beyond their borders for new investment opportunities. While developed European and Asia Pacific economies have received a significant amount of attention, the most popular investment destinations remain the four largest emerging market countries: Brazil, Russia, [...]
