hook

Distressing Details of the UltraShorts

what you describe is not a risk, it's basic algebra (kind of like if you keep walking half way across the room you never get to the other side). If you missed the very basic nature of magnifying daily percentage returns, you shouldn't be investing other people's money, or your own for that matter. the real risk of these instruments is counterparty risk as well as SEC no shorting risk. because of the set up of the funds, someone is providing the total return swap that is generating the double daily return. put simply, like any leveraged vehicle, these funds work quite well as leveraged trading vehicles in trending mkts but horribly in backing and filling or choppy mkts. the anti-leverage fund rhetoric is hitting a fever pitch which leads me to believe the market is about to trend in one direction or another