JPDD

Some Thoughts on Leveraged ETFs

I find it noteworthy that the list of "Principle Risks" has changed in the prospectus over time. Note the addition of "Inverse correlation risk" (for example:

From today's prospectus:
<i>ProShares UltraShort Financials is subject to the
following principal risks:
• Aggressive Investment Technique Risk, Concentration
Risk, Correlation Risk, Counterparty Risk,
Credit Risk, Early Close/Trading Halt Risk, Equity
Risk, Inverse Correlation Risk, Investment Company
and Exchange Traded Fund Risk, Liquidity
Risk, Market Price Variance Risk, Market Risk,
Non-Diversification Risk, Portfolio Turnover Risk
and Short Sale Risk.</i>

From Oct 07:

<i>The UltraShort Financials ProShares is subject to
the following principal risks:
• Aggressive Investment Technique Risk, Correlation
Risk, Counterparty Risk, Concentration Risk,
Credit Risk, Early Close/Trading Halt Risk, Equity
Risk, Liquidity Risk, Market Price Variance Risk,
Market Risk, and Non-diversification Risk.</i>

There are diffs in other paragraphs as well.