Fatty's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/300246/comments http://seekingalpha.com/article/104242-new-direxion-triple-leverage-funds-proceed-with-caution?source=feed#comment-308514 308514
Since doubling the 1 day returns and taking the net yield does not equal double the yield of the single day returns, the ETF is not expected to mimic the leverage ratio * the long term yield of the targeted asset.

Check out my blog post for more info]]> Mon, 17 Nov 2008 23:23:05 -0500
Since doubling the 1 day returns and taking the net yield does not equal double the yield of the single day returns, the ETF is not expected to mimic the leverage ratio * the long term yield of the targeted asset.

Check out my blog post for more info]]> http://seekingalpha.com/article/104718-triple-leverage-etfs-should-be-reserved-for-the-strongest-conviction?source=feed#comment-308511 308511
So ideally, since its targeting the daily returns, the fund management should have some sort of constant rebalancing strategy in place. For small moves, a periodic rehedging using derivatives should allow them to maintain the approximate leverage ratio. However, as the underlying, targeted asset moves more, the fund will have to rehedge to readjust the leverage ratio.

Basically, I think they would try to provide an "instantaneous" 3x returning portfolio. In typical cases, a day-over-day portfolio value would match this. If they rehedged intraday, it would be from the point where the fund was rehedged that it would be "returning 3x".

So for example, if the benchmark was up 30% and the 3x bear ETF was hedged at every 10% interval, the ETF would be down 30%, three times, or .70*.70*.70 = 44% of the fund would remain at the end of the day, so down 56%. Depending on what their rebalancing strategy was, it could lead to dramatically different end-of-day returns,]]> Mon, 17 Nov 2008 23:20:43 -0500
So ideally, since its targeting the daily returns, the fund management should have some sort of constant rebalancing strategy in place. For small moves, a periodic rehedging using derivatives should allow them to maintain the approximate leverage ratio. However, as the underlying, targeted asset moves more, the fund will have to rehedge to readjust the leverage ratio.

Basically, I think they would try to provide an "instantaneous" 3x returning portfolio. In typical cases, a day-over-day portfolio value would match this. If they rehedged intraday, it would be from the point where the fund was rehedged that it would be "returning 3x".

So for example, if the benchmark was up 30% and the 3x bear ETF was hedged at every 10% interval, the ETF would be down 30%, three times, or .70*.70*.70 = 44% of the fund would remain at the end of the day, so down 56%. Depending on what their rebalancing strategy was, it could lead to dramatically different end-of-day returns,]]> http://seekingalpha.com/article/104963-market-not-risky-enough-for-you-try-these-two-new-triple-levered-etfs?source=feed#comment-308508 308508
Depending on the index return you are targeting, it may be beneficial to use futures to achieve the same leverage ratio (if a liquid future is available).]]> Mon, 17 Nov 2008 23:14:29 -0500
Depending on the index return you are targeting, it may be beneficial to use futures to achieve the same leverage ratio (if a liquid future is available).]]> http://seekingalpha.com/article/106143-highly-volatile-new-direxion-triple-etfs-could-revolution-day-trading?source=feed#comment-308507 308507
Depending on the index return you are targeting, it may be beneficial to use futures to achieve the same leverage ratio (if a liquid future is available).]]> Mon, 17 Nov 2008 23:14:11 -0500
Depending on the index return you are targeting, it may be beneficial to use futures to achieve the same leverage ratio (if a liquid future is available).]]> http://seekingalpha.com/article/105263-direxion-launches-3x-leveraged-etfs?source=feed#comment-308500 308500 Mon, 17 Nov 2008 23:00:29 -0500 http://seekingalpha.com/article/105263-direxion-launches-3x-leveraged-etfs?source=feed#comment-308499 308499
There are better ways to achieve the same level of leverage.]]> Mon, 17 Nov 2008 22:58:51 -0500
There are better ways to achieve the same level of leverage.]]>