| Over the last few years I have examined leveraged index ETFs and reverse ETFs for evidence of volatility drag: that is, the penalty owners of the shares suffer because of the need to rebalance the ETF's portfolio at the start of each trading day. An example of the mathematics of volatility drag is shown here.
I have found since percentage fluctuations in the broad indexes are minimal, using leveraged and inverse ETFs to amplify returns or accrue profits during a correction without having to sell short is a profitable strategy even when these ETFs are held for intermediate time periods---several months to even a year...............................................Full Article: Source
|