I looked at some of the popular inverse ETFs such as ProShares Short S&P 500 (SH), ProShares UltraShort S&P 500 (SDS), Direxion Daily S&P 500 Bear 3X Shares (SPXS), ProShares Short Dow 30 (DOG), etc. I notice that they are only designed to be held for one day, because they are rebalanced daily, and that rebalancing may introduce losses. I looked up even more inverse ETFs, and I notice that practically all of them reset daily. So my question is: why do they have to reset daily (and not weekly or monthly or yearly)?
There are monthly leveraged funds. They will have "monthly" in the name. An example is RMQHX.– Ben VoigtMay 27, 2020 at 15:17
Leveraged ETFs aim to provide a multiple of the daily return of the underlying index. Price movement in the underlying changes the exposure and the ETF needs to rebalance the portfolio in order to maintain the desired leverage. This tends to occur daily.
Most leveraged/inverse ETFs reset their leverage daily, but some have monthly reset periods. PowerShares and Deutsche Bank offer a number of monthly leveraged commodity ETNs, including products focusing on gold (DGZ), agriculture (DAG), and base metals (BDD). There are also 3x and -3x ETNs offering exposure to long-term Treasuries (LBND, SBND)