Since peaking on Sept. 18, the S&P 500 is now off nearly 4%. The Dow Jones Industrial Average has been only modestly better with a 3.5% decline over the same period while the NASDAQ Composite stands out, and for all the wrong reasons, with a decline of 4.4%.
Such swift downside moves remind (and tempt) investors that are times when leveraged exchange traded funds post almost outlandish returns as some of these funds have done in recent weeks.
Even with those tantalizing short-term returns any examination of leveraged ETFs must be accompanied by the reminder that 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.
Additionally, active investors should study the impact of the daily rebalancing process leveraged ETFs go through. Kid Dynamite’s World explores that topic as it pertains to the well-known Direxion Daily Gold Miners Bear 3X Shares (NYSEArca: DUST) and the Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT).
With those disclaimers in mind, let’s have a look at some leveraged ETFs that have been on a torrid pace over the past month, starting with the…