It should be noted that these funds try to reflect the daily movement of the underlying index, so it is ill advised to hold the funds over the long-term.
Leveraged and inverse ETFs are funds that aim to magnify the daily moves of the market. In a short double-leveraged fund, if the index goes up, then the fund goes down twice that amount. In a long leveraged fund, if the index goes up, the fund doubles that. The same principle applies when you’re talking about triple-leveraged ETFs, too. [Special Report: Leveraged and Inverse ETFs.]
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Max Chen contributed to this article.