Potential traders should keep in mind that these funds will try to seek their leveraged/inverse return for a single day and do not seek to achieve their stated investment objective over a period greater than one day.
“The pursuit of daily leveraged investment goals means that the return of the Fund for a period longer than a full trading day may have no resemblance to 300% of the return of the Benchmark Oil Futures Contract for a period of longer than a full trading day because the aggregate return of the Fund is the product of the series of each trading day’s daily returns,” according to USCF. “For the Fund to maintain a consistent 300% return versus the Benchmark Oil Futures Contract, the fund’s holdings must be rebalanced on a daily basis by buying additional oil Interests or selling oil Interests that it holds.”
Traders should keep in mind that due to the compounding effect of daily rebalancing, the geared ETFs may not perfectly reflect their stated objective over extended periods, especially during more volatile market conditions.
For more information on new fund products, visit our new ETFs category.