Why Leveraged ETFs Are More Dangerous Than Ever

Why Leveraged ETFs Are More Dangerous Than Ever

Exchange-traded funds have revolutionized the investing world, giving investors access to many different parts of the market that used to be closed to them. However, ETFs have also introduced strategies that aren't always ideal for long-term investors. In particular, leveraged ETFs aim to offer two, three, or four times the daily returns of the indexes they track. While they do a good job of accomplishing those short-term goals, many investors misuse leveraged ETFs as long-term investments.

The reason leveraged ETFs are more dangerous now than ever is that because many parts of the market have soared lately, long-term leveraged ETF investing has produced huge returns that could lull investors into a false sense of security.

Leveraged ETF

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Source: Fool.com