Those who don't quite know why leveraged ETFs fail to track their index when held for more than one day can take a look at the math in Monday's Wall Street Journal
. The paper explores the conundrum of these exchange-traded funds that do not always perform as expected. ProShares
and Michael Sapir
get a word in, as does Direxion
: its word is "daily."
"In volatile times, many knowledgeable investors turn to leveraged and inverse ETFs not only to seek returns from market swings but also to help manage risk," Sapir, chairman and chief executive of ProShare Advisors, tells the paper. "Investors should do their homework on these products and understand that the math of compounding can cause returns over time to be higher or lower than the daily objective."
Sean Hanna, Editor in Chief
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