Leveraged & Short ETFs
Typically ETFs track an index. Using a combination of options, futures, and swaps some firms have designed ETFs capable of tracking approximately −1x, 2x, −2x, 3x and −3x the daily returns of an index. 3x and −3x ETFs were first released on November 8, 2008 by Direxion Funds. These funds are structured in a sophisticated way, and due to their extreme volatility they may not be appropriate vehicles for the casual investor. (Note that obtaining 2x the daily returns for one year does not imply that one will receive double the annual returns of an index). On August 18, 2009 the U.S. Securities and Exchange Commission issued a warning to investors that leveraged exchange-traded funds could lead to big losses even if the market index or benchmark they track shows a gain.
Read more about this topic: List Of American Exchange-traded Funds
Famous quotes containing the word short:
“However far modern science and technics have fallen short of their inherent possibilities, they have taught mankind at least one lesson: Nothing is impossible.”
—Lewis Mumford (1895–1990)