Do You Play With Leveraged ETFs?

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ETFs aren’t just about long-plays on industries, indices, or countries. There’s a whole tool kit of DYI tools investors can use to play hedge fund at home.Some of those are leveraged ETFs. Those are ETFs that allow investors to multiply their short or long plays on a particular index, asset, or industry.

The list is epic, and provides investors with a toolkit to act on some of their David Einhorn style dreams.

But they are in no way child’s play. One of the problems with leveraged ETFs is that, the longer you hold them, the less they match the underlying item they’re meant to be bullish or bearish on. So, for instance, if you buy a copper bear ETF, and hold onto it for months praying for that Chinese hard landing, it may not even pay out as you expect at the end.

Rather, they’re meant to be used on a day to day basis, or as a hedging tool by advanced investors.

Nevertheless, some retail investors do dabble in their trade.