Leveraged Decay: The Dangers of Long-Term Investing with ETFs

Leveraged ETFs are exchange-traded funds that use debt and derivatives to amplify the daily gains of an underlying index. These vehicles are still subject to market pressures of buying and selling, and while they are designed to mimic the daily returns of the underlying asset, they don’t match the underlying asset exactly. Below we look at some of the commonly asserted dangers of investing in leveraged ETFs.