Pitfalls of leveraged ETFs

by Dimi15




Leveraged ETFs are often thought to be as the ultimate investment vehicles in volatile marketplace circumstances. Traders who want to hedge their stock portfolio might buy a double short of Dow Jones Monetary Index <IYF> or of S&P 500 <SDS> expecting to make everyday investment returns of 200% the inverse of the every day efficiency of the index. Therefore, for 1 percent decline of the industry, they expect to make a profit of 2 percent.



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