Leveraged ETFs: Triple the Returns. Triple the Risk?
May 19, 2008
Just read an article on today’s MarketWatch.com by John Spence about an investment product I’ve never heard of before – Leveraged ETFs.
These are ETFs that attempt to triple the returns of their particular segment of the stock market. So, if the S&P 500 index rose 2%, the Leveraged ETF that tracks it would shoot up 6%.
The investment company that came up with these funds is Direxion Funds. And their new supercharged ETFs would track U.S. benchmarks like the S&P 500, the Dow Industrial and the NASDAQ 100.
As good as triple returns sounds, remember that on the flip side, these supercharged ETFs could also triple their losses. As they say in investing, the more risk, the more return. But are these too risky?
Well, each of us have to decide that for ourselves. We all have different circumstances, needs and levels of risk comfort. But I think these ETFs are at least something to look into.
Check out the article and let us know what you’re thinking.
Triple returns? I’ll check those out. Yeah, everything’s risky, but if I can get returns like that right now, I’d take it. Thanks for letting us know about it.