Leveraged ETFs – Links and Resources
Leveraged ETFs are a relatively new instrument in the financial world. Although 2x ETFs have been around for several years now, the 3x ETFs by Direxion have really sparked people’s interest in using these leveraged ETFs as trading vehicles. Unfortunately, many mistake them as long term investment vehicles. While it is possible to buy and hold these leveraged ETFs for the long run, it is important for such investors to know the fundamental risks involved with such a strategy.
This page (Leveraged ETFs – Link and Resources) is an attempt to become a central resource for links to information regarding leveraged ETFs. As new information and articles are made available, those links will be added to the page.
List of Leveraged ETFs
Leveraged Decay – A simple introduction to the risks of leveraged ETFs that uses charts and images to describe the long term effects of leveraged decay. If you intend to hold on to leveraged ETFs for longer than a day, this is a must read article (I am biased, I wrote it).
Trend, Volatility, and Returns – Another must read study that goes more in depth on leveraged decay, but also covers other aspects such as compounding. Written by Connors Research, (the research division of The Connors Group) which is part of a network of sites such as TradingMarkets.com, PowerRatings.net, and TheMoneyBlogs.com.
Direxion Literature – A fantastic set of 5 articles describing the ins and outs and risks of leveraged ETFs.
Understanding ProShares’ Long Term Performance – A 2-page document that has a simple explanation of the relationship between compounding and volatility in leveraged ETFs.
On-Demand Webinar: Getting Leverage, Going Short – A must watch webinar that covers the history of Leveraged ETFs, an overview of how they work, and information on their tracking properties. Written by Matt Hougan, editor of IndexUniverse.com. The link includes a PDF of the slides if you do not want to watch the video.
Research Documents on Leveraged ETFs
Popular Papers on Leveraged ETFs
How Long Can You Hold Leveraged ETFs?
UltraShort ETFs – They work if you follow the rules
The Truth About 3x ETFs and Long Term investing
What Happens When You Hold Leveraged ETFs for More than One Day?
Leveraged and Short ETFs – 3 Flaws You Should Know
Explaining Inverse and Leveraged ETFs
FAZ 3x Financial Bear Fund Crushed