cato

ProShares Ultra and UltraShort Sector ETFs: Does 2 = 2?

Bingo Ben! People get confused and think these funds will attempt to track 2X (or -2X) over the course of a year. In fact, their goal is to do it _every day_.

Whether you realize it or not, a 2X fund is an implicit momentum play, since it reloads every day. It will always force you to buy a little more at higher prices and a little less at lower prices. If the market goes up and down a lot over a year and then ends the year unchanged, you will lose a lot of money!