June 29, 2009 at 3:00 pm by Tom Lydon
ProFunds Group has launched two new exchange traded funds (ETFs) that up the ante on the S&P 500 times three, making them the next triple leverage provider to enter the popular space. This launch comes at a time when the scrutiny on leveraged funds is tight.
The provider has launched their first triple-leveraged ETFs, tracking the the S&P 500 Index. These ETFs, which triple the performance of the S&P 500 in both directions, are also the first triple leverage funds to track the benchmark index, notes John Spence for MarketWatch. Both ETFs are meant to be tracked on a daily basis and are not meant for long-term buy-and-hold investing:
The provider also offers ETFs that track the S&P in both directions by 200%. The timing of this leveraged launch comes after Finra issued a warning to brokers and advisors about the proper management, fairness and accuracy of sales and all sales materials. This is because of the nature of their sophisticated strategies, daily rebalancing and internal compounding, which leads to tracking error over time and makes them unsuitable for buy-and-hold investing. Providers such as Direxion, Rydex and ProShares have been doing their part to educate investors about the uses of these funds.
For more stories about long-short ETFs, visit our long-short category. For more information on new ETFs, visit our new ETF category, as well.
Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.
Tags: Long-Short ETFs, New ETFs, S&P 500
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