The ETF is a “spread-betting ETF that profits from gold rising in value relative to the S&P 500,” said Morningstar analyst Samuel Lee in a profile. “The fund aims to return twice the spread by using lots of leverage. It gains two-times long exposure to gold and two-times short exposure to the S&P 500 via futures contracts, for a gross leverage ratio of 4:1.”
He said the ETF is highly leveraged and volatile. “Like virtually all leveraged funds, this product is suitable only for sophisticated traders willing to monitor their positions and trade daily.”
Since the ETF “resets” daily, the leverage may not hold up over periods longer than one day. [Primer on Leveraged and Inverse ETFs]
Other “spread” ETFs managed by FactorShares include FactorShares 2X S&P500 Bull/USD Bear (NYSEArca: FSU), FactorShares 2X S&P500 Bull/TBond Bear (NYSEArca: FSE), FactorShares 2X Oil Bull/S&P500 Bear (NYSEArca: FOL) and FactorShares 2X TBond Bull/S&P500 Bear (NYSEArca: FSA). [New Provider Puts Twist on Leveraged ETFs]
FactorShares 2X Gold Bull/S&P 500 Bear
