alivewweb

Double and Triple ETFs Decay Their Value Faster, By Design

I think the real question is why the issuer created the securities in the first place.

Whose need are they addressing? Was it simply to roll over these holdings or churn them if you will to generate in-house commissions like a kid with his first margin account in the discount brokerage. Or did they issuers not see a real need?

I do not understand how these are created in the first place.I always assumed they were long and short the same basket of stocks. And a equal number of shares issued so that both side would inially have the same market caps.

And I was troubled by the simple fact the total market caps of both sides seemed to be contracting and perhaps for the reasons you suggest.

But the issuers have constructed these leverage finds incorrectly IMO. Take that basket long or short, double long or double short using margins, and triple long or short using options as the added kicker.

Pretty simple. Or perhaps just simple minded.

Nice article.