Leveraged ETFs: An Endangered Species? – ProShares UltraShort 20+ Year Trea (ETF) (TBT), ProShares UltraShort S&P500 (ETF) (SDS)

Page 1 of 2

Exchange-traded funds have made investing a lot simpler for millions of investors. But ETFs have also introduced a wide variety of previously unavailable assets to the mainstream investing world. One of the most dangerous and misunderstood sets of funds has been the leveraged ETF space, where traders seek to make big bets on fast-paced moves in a particular market.

Despite their high risk, leveraged ETFs have shown no sign of disappearing. But with a recent move by one of the pioneers of the industry to close its final two leveraged ETFs, the big question is what’s behind the decision to abandon the space. Could leveraged ETFs finally be losing their appeal? Let’s take a closer look.

Leveraged ETF

Guggenheim gives up on leveraged ETFs
Recently, ETF provider Guggenheim Investments decided to close nine of its ETFs. Although most of the funds affected were based on specialized sectors or market cap, two of the funds were leveraged ETFs tracking the S&P 500. There’s nothing all that surprising about the news in itself. Both of the ETFs had assets well below the $100 million mark, which is widely seen as the amount necessary for an ETF to survive for the long term.

But Guggenheim’s decision is remarkable because of its history. As a recent article in ETF Daily News noted, Guggenheim acquired the ETFs when it bought out Rydex, which was the first company to offer a leveraged mutual fund two decades ago.

Who’s left?
With Guggenheim’s departure, the remaining big players in the leveraged ETF space are ProShares and Direxion. But unlike Guggenheim, both Direxion and ProShares show every sign of staying in the leveraged-ETF space for a long time.

ProShares in particular has a healthy slate of funds. Look at a list of leveraged ETFs by assets under management, and you’ll find that most of the entries come from ProShares. In large part, the success of ProShares owes to its ability to offer ways to play popular trends, as its biggest funds show.

For years, investors have been looking for bond yields to start rising. ProShares UltraShort 20+ Year Treasury (NYSEARCA:TBT) promises high returns when that happens, and the fund has more than $3.3 billion in cash, along with a variety of derivative positions designed to provide returns equal to double the inverse daily return of an index of long-term bonds.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!