What is a leveraged ETF?
Quite simply, leveraged ETFs are securities that attempt to replicate multiples of the performance of an underlying financial index. So if the index X goes up 10%, then a possible leveraged ETF of index X could see 30% returns.
Inverse ETFs are designed to replicate the opposite direction of these same indices, often at a multiple. These ETFs often use a combination of futures, swaps, short sales, and other derivatives to achieve these objectives.
With 2 and 3x leveraged ETFs, they are a great way to maximize your returns, but can also act as a medium to destroy your portfolio.
Is a leverage ETF a good long-term investment?
The quick answer is no…. not for the long-term trader, but the market today isn’t really made for any type of long-term traders anymore.
While the benefits of ETFs are that they can give you more control than mutual funds and increased diversity than individual stocks, leverage ETFs are ETFs on steroids and can tend to be more volatile.
Most leveraged and inverse ETFs are designed to achieve these results on a daily basis only. This means that over periods longer than a trading day, the value of these ETFs can and usually do deviate from the performance of the index they are designed to track. Over longer periods of time or in situations of high volatility, these deviations can be substantial.
What are some good leverage ETFs?
Over the last year, ETFs such as FAZ and FAS were popular choices to play the financial markets; however, you can find a full list of all 2x and 3x daily return leveraged ETFs below.
Leveraged ETF Ticker Symbols for all 2x and 3x Return Funds … – Leveraged ETFs offering 2X and 3X daily returns for various sectors and indices like Tech, Nasdaq, Biotech, Oil and more are in demand. This ticker symbol list of all such ETFs is a handy tool when selecting optimal trading options.