Seeking Alpha
Profile| Send Message|
( followers)  

The Down Side

Leveraged exchange traded funds are those which seek twice or even three times the return of a given index. There are leveraged ETFs for those who think an index is going up and ETFs for those that want to profit from the downside as well. Here is a list of those that have been on the down side for 2010.

Leveraged ETFs — the down side

Click to enlarge

bespoke-levdown409.png

Source: Bespoke Investment Group

It is an indication of how strong the markets have been this year that all the funds on this list are short funds seeking to profit when the market the ETF covers falls. No doubt we will see some of these on the up side list at some point in the future.

The Up Side

There are leveraged ETFs for those who think an index is going up and ETFs for those that want to profit from the downside as well. Here is a list of those that did well on the up side so far in 2010:

Leveraged ETFs — the up side

Click to enlarge

bespoke-levup409.png

Source: Bespoke Investment Group

All but two of the winners on this list are long ETFs. That is, they are designed to do well when the market covered by the ETF goes up. It is also interesting that the two short ETFs on this list that did well covered the agriculture market.

These leveraged ETFs are potent speculative or trading vehicles. Use them carefully, if at all.

Disclosure: No positions

Source: The Up Side and Down Side of Leveraged ETFs