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ProShares Files For More Leveraged ETFs: China, Biotech, Real Estate, Materials

Michael Johnston — Sat, 13 Mar 2010 20:23:35 +0000

ProShares, the largest issuer of leveraged and inverse ETFs, has filed for SEC approval on several additional products. The proposed funds include: Short FTSE/Xinhua China 25 (YXI): This ETF would seek to deliver daily investment results equal to the inverse of the daily change in the FTSE/Xinhua China 25 Index. This index consists of 25 mega-cap Chinese equities, and is the basis for the largest U.S.-listed China ETF (FXI). ProShares already offers 200% and -200% ETFs based on the FTSE/Xinhua China 25 Index (XPP and FXP, respectively). Ultra Nasdaq Biotechnology: This ETF would seek daily investment returns equal to 200% of the daily return on the Nasdaq Biotechnology Index, a benchmark tracked by the iShares Nasdaq Biotechnology Index Fund (IBB). UltraShort Nasdaq Biotechnology: This ETF would be linked to the same index, seeking to deliver daily returns equal to -200% of the daily change in the index. Short Basic Materials [...]

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More Laughable Leveraged ETF Lawsuits

Michael Johnston — Thu, 21 Jan 2010 14:41:24 +0000

One of the major stories in the ETF industry over the last year has centered on the appropriate uses and potential abuses of leveraged ETFs. In the wake of the unprecedented equity market volatility during 2008 and the first quarter, some investors expressed dismay over the performance of 2x and 3x leveraged funds over multiple trading sessions. While these investors account for a very small portion of leveraged ETF use, their outrage caused quite a stir, and even sparked several lawsuits. Because leveraged funds are designed to deliver amplified returns on a benchmark on a daily basis, their exposure is reset daily. Consequently, returns to these funds over multiple trading sessions depend on both the change in the underlying index and the path of the benchmark during the period in question. In trending markets, the return on a leveraged ETF often exceeds the simple product of the target multiple and [...]

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Top Ten Performing Leveraged ETFs Of 2009

Michael Johnston — Fri, 18 Dec 2009 16:56:06 +0000

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 — [...]

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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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ETF Database » UYM

ProShares Files For More Leveraged ETFs: China, Biotech, Real Estate, Materials

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