When leveraged and inverse ETFs were first released they were touted as wonderful new innovations. Individuals and institutions can double their exposure to a sector or index quickly and easily, the complicated models created by the providers are readily available in a neat little package. As they have developed more and more investors have caught on to the fact that they don't perform as expected.
- Since June 21, 2006 SSO (2x S&P 500) is down 66% while SDS (-2x S&P 500) up on 12%.
- Since February 1, 2007 DIG (2x S&P 500 Energy) is down 63% while DUG (-2x S&P 500 Energy) is down 56%.
- Since November 6, 2008 FAS (3x Russell 1000 Financials) is down 84% while FAZ (-3x Russell 1000 Financials) is down 87%!! The inverse ETF has underperformed the long fund in a period where the underlying index is down 18%!