Wednesday, October 28, 2009

An Experiment in Hedging With ETFs -

Remember what I mentioned last week? Holding leveraged ETF's log term is generally a losing game.

An Experiment in Hedging With ETFs -
"ProShares warns investors that it aims to have the funds' movements correspond to the inverse of the relevant market indicator on a daily basis. Over more time, the effects of compounding can (and generally will) dilute or enhance the results. For the second quarter, when the S&P 500 gained 15.93%, the Short S&P500 lost 16.03%. Year-to-date the total return for the S&P 500 is up 20.10%, but the short fund is down 22.63%."

and again, it is much worse for leveraged funds.

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