Research note: Why leveraged ETFs can pack a surprise

Sponsored By Vanguard

Topics:

Banking & Capital Markets > Equity

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Abstract:

For many investors, a short-term horizon typically means a year or two. With the advent of 2:1 and 3:1 leveraged ETFs, "short term" has been truncated to a trading day or less, an appropriate horizon for these hedging tools. However, some investors have considered holding leveraged ETFs for longer periods.

This note explains that beyond one trading day, leveraged ETFs may produce returns far afield from what might be inferred from their names or stated strategies.

DETAILS

Sponsored by: Vanguard

Released: July 31, 2009

Length: 6 pages

Format: PDF (55 kb)

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