As is the case with so many things in life, leveraged cuts both ways and that is particularly true in financial markets.
Of course, financial markets leverage also means a conversation about leveraged exchange traded funds, an exciting but risky corner of the broader ETF universe.
These products are best suited for active, risk-tolerant traders, something that both ProShares and Direxion, the two largest issuers of leveraged of inverse and leveraged ETFs, do a good job of explaining to investors on their web sites.
As we noted earlier this week, although leveraged ETFs are not buy-and-hold instruments, it is hard to ignore the year-to-date returns offered by 2013’s 10 best leveraged ETFs. All of them have at least doubled. Some could be sitting on triples by the end of the year. [Top 10 Leveraged ETFs of 2013]
But as the following list of the 2013’s 10 worst leveraged ETFs shows, holding the wrong leveraged funds for extended time frames can be hazardous to a portfolio’s health. All performances are as of Dec. 4. Let’s get started with the…