Systemic Impact
Because inverse ETFs and leveraged ETFs must change their notional every day to replicate daily returns (discussed below), their use generates trading, which is generally done at the end of the day, in the last hour of trading. Some have claimed that this trading causes increased volatility (Cheng & Madhavan 2009), while others argue that the activity is not significant (WSJ article cites dissent).
Read more about this topic: Inverse Exchange-traded Fund
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