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Questions tagged [leveraged-etf]

A **leveraged ETF** is an ETF which seeks to deliver some multiple (frequently 2x) the **daily** performance of a benchmark index. However, over multiple days it will **not** return 2x the index. **You should not buy and hold a leveraged ETF for any more than a couple of days at a time.**

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Why ETFs that replicates the MSCI World LEVERAGED 2X Daily (SHLE) don't seem to exist (yet)?

I am a French young personal investor that took interested in ETF during the pandemic COVID. I have soon started to invest in ETF that follows indices such as the MSCI World, the S&P500 or the ...
JKHA's user avatar
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12 votes
5 answers
4k views

Are there any *real* reasons not to long hold leveraged ETFS like TQQQ?

Across a variety of sources, I often see the following argument (paraphrased): Leveraged ETFs are a bad investment, because if the stock goes up x%, then down x%, an ETF leveraged n-times has a value ...
Caleb Briggs's user avatar
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1 answer
167 views

Are leveraged risk-parity portfolios too good be true?

I was reading the bogleheads forum and it seems that lifecycle investing or leveraging a mixed portfolio of stocks and bonds have popular topics for a while now. Whether you achieve it through box-...
Eric Gumba's user avatar
1 vote
2 answers
142 views

Stock Splits Question on ProShares UltraPro QQQ

What am I doing wrong here? The price of 1 share of $TQQQ was $0.43 in Feb 2010, today the price of 1 share of $TQQQ is $ 54.76, and the stock has split as follows 02/25/2011 2 for 1; 05/11/2012 2 ...
stargazer's user avatar
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27 views

Long Term Investing in leveraged ETFs such as TQQQ [duplicate]

I am currently investing in TQQQ. My plan is to keep it for the long term. I have read that long term investing in leveraged ETFs is bad. Is that true? If it is I do not understand why since the stock ...
Bob's user avatar
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2 votes
0 answers
53 views

availability of high multiple leveraged ETF in developed world [closed]

Is there any country or exchange where highly leveraged ( such as 5X, 8X or 10X ( instead of 3X) ETF/ETN are available for trade. I remember seeing something like this in news but could not locate ...
puzzled's user avatar
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1 vote
1 answer
138 views

Aren't options priced asymmetrically for Inverse and Leveraged ETFs, for the same underlying index?

I ask merely about pairs of Bear (Inverse) and Bull (Leveraged) ETFs for the same underlying index. The Bear ETF's price shall be bounded below by 0. But the bull ETF's price is unbounded. But doesn't ...
Mark Son's user avatar
3 votes
2 answers
1k views

wash sale with leveraged ETF

If a person sales regular ETF ( suppose QQQ) at a loss and buys a leveraged ETF on similar Index e.g TQQQ within 30 days, will the loss on QQQ be treated as wash sale ?
puzzled's user avatar
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-1 votes
2 answers
191 views

At the time when market opens what is the best way to know if market will go up or it will go down [closed]

I know markets are driven by multiple factors and any news, any time can cause market to go up and down. Assuming there is no major event/news during the day, at the time when market opens, what is ...
OpenStack's user avatar
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1 answer
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Is there a better expected return on investment than with ETFs accepting higher variance? If yes, what is the maximum?

My understanding (a bit oversimplified, ignoring inflation etc.) is: I do nothing with my money: Variance is 0, expected return is 0. I put my money in ETFs: Variance is positive, expected return ...
simplemind's user avatar
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Who is counter party to leveraged ETF e.g TQQQ

I was looking at return of TQQQ, and was surprised with result. I understand that, it is not equity based ETF, and is using derivatives. But I could not understand who is acting as counter party of ...
puzzled's user avatar
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1 vote
1 answer
98 views

Vanguard 500 Index Fund ETF, fixed income? [closed]

It seems some ETFs pay dividends other are fixed income. How can I know the one I'm interested in (i.e. Vanguard 500 Index Fund ETF) pays dividends or have fixed incomes?
ebepem's user avatar
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1 vote
1 answer
124 views

Can a leveraged ETF's net assets suddenly go below zero?

When trading stocks on margin or when holding futures, sudden price movements may wipe out the posted margin. In some cases, the trader may even lose more than the posted margin (i.e. the trader owes ...
Flux's user avatar
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7 votes
2 answers
487 views

Is a market-tracking leveraged ETF more reward for same risk?

Due to the way gains compound on one another, and the daily resetting of leveraged ETFs, a 3x ETF will yield MORE than 3x of the underlying asset (in a bullish market), sometimes up to 10x gains in a ...
Tyler M's user avatar
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Why wouldn’t I invest in NYSE:UPRO over something like NYSE:IVV? [duplicate]

I recently came across this 3x leveraged etf of the S&P 500 (NYSE:UPRO). I understand that it’s a risky investment, but I still see way more reason to buy it over any other thing that tracks the S&...
Cotton Headed Ninnymuggins's user avatar
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1 answer
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Does a one stock leveraged ETF behave like margin?

I am reading about leveraged etfs and I am very confused. It seems they don't always follow the stock prices they should be following and not always doing what they are supposed to do. For example a ...
user1721135's user avatar
2 votes
1 answer
296 views

DEGIRO: Is Debit Money better than an MMF-ETF short for leveraging?

I was looking into the options of leveraging my main index fund by a certain amount and was recommended to use Degiro's inhouse credit product "Debit Money". Current annual cost: 1.25% pa ...
Steven's user avatar
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1 vote
2 answers
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Is investing in 2x QQQ (QLD) the same as investing in my account buying QQQ but making it 2x using my margin?

It seems to matter for the following, if the increase or decrease happens evenly over 30 days vs if it happen overnight, for the case of Account 1, but does not matter for Account 2. So what if (1) it ...
nonopolarity's user avatar
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Does TQQQ get wiped out if it QQQ drops 34%? But what if after I purchase, it first went up 50% and then down 34%? (100 to 150 and then back to 100) [duplicate]

Since TQQQ is 3x the leverage of QQQ, so the conventional wisdom is: When TQQQ drops 34%, then it is all "wiped out" (meaning a $100 investment will go to $0 now). And TQQQ itself is also ...
nonopolarity's user avatar
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6 votes
4 answers
3k views

Why don't index ETFs use leverage to offset their fees and eliminate tracking errors?

If a hypothetical stock index returns 100%, an ETF tracking the index might only return 99% because of ETF fees. This introduces tracking errors. Why don't index ETFs use leverage to offset the fees ...
user102086's user avatar
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I invested in a leveraged (x3) ETF but it does not grow as the underlying index. What went wrong? [duplicate]

I invested in Ayalon Extreme S&P 500 which is leveraged S&P. But its graphic does not follow the graphic of S&P. This is S&P which recently improved historic maximum: And this is the ...
Anixx's user avatar
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0 answers
170 views

Taxation of capital gains on leveraged ETFs

Are capital gains on leveraged ETFs in the USA given a tax treatment different from the tax treatment given to capital gains on stocks? Leveraged ETFs use derivatives to generate their returns, and ...
user2371765's user avatar
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1 vote
1 answer
808 views

Why do inverse ETFs reset daily?

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 (...
Flux's user avatar
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3 votes
3 answers
2k views

What, exactly, are the "S&P 500 index swaps" held by UPRO?

I've thought about investing in UPRO, the ProShares UltraPro S&P500 3x leveraged ETF. But, of course, I don't want to invest in it until I have a good understanding of it, including its historical ...
Tanner Swett's user avatar
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0 votes
2 answers
416 views

UCO reverse split make average cost cut in half

Before the 2020 April reverse split of UCO Proshare, I hold 39797 shares of UCO with an average cost of 1.4282 USD/share. After the 1-25 reverse split, as far as I understand, the number of shares ...
Cuzaker's user avatar
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1 vote
0 answers
158 views

Leveraged ETF myths, warnings, and SPXL long?

I read an article called "3 of the worst ETF's for long term investors" and it says SPXL is one of them. The reason it gives is: "If the S&P 500 consistently goes up over time, the SPXL will ...
cds333's user avatar
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3 answers
230 views

Ride leveraged inverse ETF long term in bear market?

I saw this question Why are daily rebalanced inverse/leveraged ETFs bad for long term investing? And from the answers it looks like everyone agrees they're a bad idea, however the graph on SPXU for ...
user avatar
0 votes
1 answer
101 views

Have leveraged short ETFs lost equity?

I would like to take some hands-off, leveraged short positions of the global market, or portions thereof. There a many leveraged short ETFs. On looking at them, unsurprisingly the value of them has ...
Kohjah Breese's user avatar
1 vote
1 answer
1k views

How to find equivalent US or Worldwide ETFs that are compliant with European PRIIPS regulations?

I used to invest in the following hyper-diversified portfolio : +--------+--------------------------------------------------+-------------+ | ticker | Exchange-traded Fund ...
OlivierLarue's user avatar
3 votes
0 answers
392 views

Leveraged NASDAQ ETF outperforms 3x non leveraged NASDAQ ETF?

I was reading article an about leveraged ETFs on seekingalpha and found this: High-beta strategies have the potential to help you achieve your goals. Of particular interest is the fact that having 33 ...
ytoledano's user avatar
  • 401
2 votes
2 answers
796 views

Do the rebalancing costs of leveraged ETFs really outweigh the leverage?

I read the answers from the following two posts describing why daily leveraged ETFs are a bad idea to hold in the long term: Investing in a leveraged index ETF for retirement. Risky? Why are daily ...
Murey Tasroc's user avatar
5 votes
2 answers
2k views

Is there evidence that in the long-term, leveraged ETFs perform poorly?

I came across an interesting question: "Why are daily rebalanced inverse/leveraged ETFs bad for long term investing?" Despite the topic, the answers there actually illustrated the hypothetical risk ...
Zesty's user avatar
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0 votes
1 answer
124 views

When do you buy/sell leveraged ETFs?

There is a little bit of a gambler in me so since I started trading with Robinhood a year ago, I decided to play with my funds a little and try to swing trade inverse ETFs (mostly SQQQ and SDOW). ...
user avatar
2 votes
1 answer
1k views

How can an EU citizen best hedge NASDAQ?

Background: I have a NASDAQ-heavy portfolio, and wanted to use the SQQQ ETF (Short leveraged Nasdaq-100 ETF) as a way to hedge on days when I expect the whole index to go down (one sub-question here ...
quetzy's user avatar
  • 226
0 votes
3 answers
172 views

What prevents leveraged ETFs from exceeding their underlying value in times of high demand?

For example, today SPY decreased -3.17% and therefore the 3x Bear SPY ETF, SPXS, increased 9.85% - roughly equivalent to 300% inverse (310%). What if you somehow foresaw the decrease early in the ...
JDK's user avatar
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2 votes
1 answer
465 views

Do the holders of an inverse ETF bear "unlimited" risk

We all know these two things: Inverse ETFs bet against a pool of stocks. This might include short selling the stocks and buying puts. Short selling has a limited upside but an unlimited downside. In ...
ToniAz's user avatar
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1 vote
1 answer
122 views

NAV Deviations in 2x ETFs

The funds in question are YCL/YCS. I was looking at the price fluctuations in these funds and noticed they are not priced accurately on an intraday basis. There is decent enough liquidity in these ...
HK47's user avatar
  • 847
2 votes
1 answer
151 views

Loss on US leveraged ETF; Don't live in US anymore

I made an investing mistake many (eight?) years ago. Specifically, I invested a very large sum of money in a certain triple leveraged ETF (the asset has not yet been sold, but the value has decreased ...
M Scales's user avatar
5 votes
2 answers
160 views

Problems with this strategy to "increase" IRA contribution maximum?

Strategy is outlined here: Using Leveraged ETFs To Game The Roth IRA Maximum Essentially, you keep 1/3 of your portfolio in a 3x leveraged ETF and 2/3 in cash. The author claims this combination (...
Ramon's user avatar
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25 votes
5 answers
8k views

Why are daily rebalanced inverse/leveraged ETFs bad for long term investing?

I was reading this article about S&P 500 short ETFs: https://www.zacks.com/stock/news/176217/4-ways-to-short-the-sampp-500-with-etfs and I was confused when it said: "investors should note that ...
glen4096's user avatar
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2 votes
1 answer
396 views

VIX and XIV moved in same direction?

Both VIX (S&P 500 volatility index) and XIV (the inverse) decreased price today. Aren't they supposed to have the exact opposite percentage gain/loss intra-day?
Keven Wang's user avatar
2 votes
1 answer
888 views

How do leveraged ETFs (index tracking) set intraday pricing?

I'm curious specifically about the pricing mechanism of leveraged ETFs, and specifically 3x - let's take SPXL as an example (3x S&P500 bull etf). I know that this fund is designed to track the S&...
Nick's user avatar
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6 votes
2 answers
1k views

Do index tracker funds (ETFs) typically pay dividends?

When you invest in a fund, such as a FTSE 100 tracker, do you get the benefit of dividends? I understand the FTSE 100 index does not include dividends. Of course, if you held the share basket yourself,...
paj28's user avatar
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1 vote
2 answers
281 views

How do currency ETFs track the spot prices? And which amount one has to invest for full hedge?

I've got a couple of doubts about how currency ETFs work. How do they track the spot price? For example, I was checking the FX pair GBPUSD, I've seen: Spot price GBPUSD: $1.5382 ETF long GBP short ...
mickael's user avatar
  • 111
10 votes
4 answers
6k views

Understanding downside of triple-leveraged ETF

What happens to the price of the triple-leveraged ETF if the S&P 500 loses more than one-third of its value (i.e., the return is below -33 1/3%)? Does it mean the value is equal to zero?
newbie's user avatar
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3 votes
1 answer
704 views

Why are there no exchange traded options on 3x leveraged ETNs

Since these would help me manage risk in my personal financial portfolio, why are there no exchange traded options on 3x leveraged ETNs? Is there a prohibition that the SEC is perpetuating? Is there ...
CQM's user avatar
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1 vote
1 answer
866 views

Why an ETF mirrors the underlying index on a day to day basis but not on a long term basis

Some ETFS like NUGT,DUST say that they replicate the performance of the underlying index on a daily basis. My first question is, do all ETFS do this, or only some? Also, why does it say that "not ...
Victor123's user avatar
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2 votes
1 answer
273 views

What Russell 2000 price action would move TZA on the upside back to its 6000 level?

Is it possible to see TZA at 6,000 ever again? What kind of decline in the Russell 2000 would it take? Since TZA was originally at 6000 and now at 15, is it possible, with a huge future downturn in ...
user14180's user avatar
6 votes
3 answers
5k views

Geared ETFs - Do they offer more than 3x leverage?

I'm very interested in geared ETFs. It appears that the highest available gear ratio is 3x the underlying security (or index). Is this due to regulation, mathematics, or market demand?
John Shedletsky's user avatar
-1 votes
1 answer
1k views

What is the daily rebalanced leverage ratio that is ideal for the S&P 500 based on past performance?

This question assumes an investor with a very low risk-aversion coefficient. The risk-aversion coefficient is basically the 2nd-derivative of an investor's utility function as a function of money. An ...
WilliamKF's user avatar
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