Click to login and read the full article.
Don’t have access? Click here to request a demo
Alternatively, Call a member of the team to discuss membership options
US and Overseas: +1 646-931-9045
UK: 0207 139 1600
Abstract
First-generation ETFs were designed as convenient, straightforward investment vehicles for earning the returns of broad market indexes. The rapid growth and competitiveness of the ETF industry has led to the development of products that bear more complicated relationships with market indexes. The first wave of these, leveraged and inverse ETFs, were engineered to meet objectives quite different from those of the traditional ETFs. This article shows how investors who used them like traditional ETFs experienced unintended consequences during the volatile markets of 2008–2009. The author explains how the daily rebalancing of leverage affects the valuation and determines the appropriate usage of such ETFs.
- Copyright © 2010 Hammond Associates. All rights reserved. Not to be reproduced or redistributed without permission.
Don’t have access? Click here to request a demo
Alternatively, Call a member of the team to discuss membership options
US and Overseas: +1 646-931-9045
UK: 0207 139 1600