tag:blogger.com,1999:blog-6833372664905554734.post8836119049972421099..comments2024-03-23T03:41:27.086+08:00Comments on Corporate Governance in Malaysia: New ETFs: exotic or toxic?M.A. Windhttp://www.blogger.com/profile/16833927103193297126noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6833372664905554734.post-86311232508853297442017-02-24T15:43:02.309+08:002017-02-24T15:43:02.309+08:00Thanks for your comment. Leveraged ETFs often prom...Thanks for your comment. Leveraged ETFs often promise to mimick the return on a daily basis. Results might disappoint in a choppy market, even if the direction is in general the one forecasted. Your example seems to illustrate that also. A case of "Buyer Beware", I guess.M.A. Windhttps://www.blogger.com/profile/16833927103193297126noreply@blogger.comtag:blogger.com,1999:blog-6833372664905554734.post-83810068132307646412017-02-24T09:58:13.391+08:002017-02-24T09:58:13.391+08:00One issue of leveraged ETFS is their natural decay...One issue of leveraged ETFS is their natural decay due to some moves. Let's take a times two ETF for example. The day the market moves up 5%, the ETF will move up 10%. Now if the next day, the market move back down to its original point, the ETF won't. Indeed, the market will have to loose 4.76% on the second day to be flat on the two days, and the ETF will loose 4.76%x2 = 9.52%. So the performance of the ETF on the two days will be -0.48% = [(1+10%)x(1-9.52%)-1]. That is the basis for a quite popular arbitrage strategy which has pushed up the price of the borrow on those leveraged ETFs.Anonymousnoreply@blogger.com