if the market goes down 25% your ETF goes down 50%, so you need the market to jump 33% to reach your break even. in this case the etf would do up 66%:

that means we, the etf owner will always lose from the geometrical of %´s ?

plus how can they leverage etf´s without extra costs (interest rates…) ?

kind regards!

My premise is not so much that ETFs are a bad idea. The generalization that market’s go up over the long haul is soundly rooted in diversification as a means to represent the market. ETFs started as indexes but have involved to become more like actively managed mutual funds that are traded on the market.

My problem with these leveraged funds are that they’re really actively managed / leveraged mutual funds under the guise of ETF, enjoying the popular image that ETFs are diversified and enjoy market-like returns.

As we all know, the majority of actively managed funds cannot beat the market. Leveraged ETFs don’t seek to represent the market but seek to beat it. There’s high turn over, there can be magnified gains but also magnified losses! How many investors can stand those before they bolt out of the fund? I would say that leveraged ETFs are merely wolves in sheeps’ clothing. Looks like an ETF on the outside, but remember, ETFs are not strictly indexes.. some ETFs represent indexes just like some mutual funds represent indexes. The difference being the MER, cost etc.. But in this case… leveraged ETFs are merely an actively managed fund that’s tradable on the market. Investors will be subject to the management capabilities of the fund manager. And until I see track record, leveraging with such unknowns isn’t ideal for me!

Given this investing style, is there any reason why buying in to a leveraged ETF that returns twice the market isn’t a good move? It’s something I’ve been considering, but have yet to move on.