Some of you might track certan ETFs from ProShares, Direxion, and other big ETF families that offer leveraged funds with increased performance. For instance, the FAS fund tracks the financials sector index at three times the normal rate due to leveraging. So, if the financial sector gaines 5% on the day, FAS will gain around 15 percent. However, the key word here is on the DAY. These leveraged ETFs are not meant to be held for long-term investing, and some amateur investors don’t realize that.
Read more from the Kiplinger article.
Notice how the guy from Direxion even admits that these funds are not good long-term investing options. Even if the fund’s index does really well over a year or three year time, it doesn’t mean that these funds will perform just as well over that period of time. These funds are meant for investors who try to time the market and profit big in short spurts of investing.