Investment: 13,000 instead of 1900 percent return – Are leveraged ETFs better than their reputation?
Experts warn against leveraged investments that are supposed to double price developments. However, all products have been in the plus since their launch, according to a Handelsblatt evaluation.
Düsseldorf – Consumer advocates and investment professionals have consistently warned against leveraged exchange-traded funds (ETFs). These funds are said to double the daily movements of the stock market. However, critics argue they are too complex for individual investors and expose them to disproportionately high risks of losses.
Their attractive returns are deceptive. According to the comparison platform JustETF, German investors currently have ten leveraged equity ETFs to choose from. Each of them has outperformed the unleveraged version since its launch. The difference is most striking in the twice-leveraged ETF from Amundi on the US technology index Nasdaq 100.
Since its launch in 2006, this ETF has surged by 13,000 percent, according to Bloomberg financial services data. A conventional Nasdaq ETF grew by only about 2,000 percent over the same period. Are leveraged ETFs better than their reputation suggests?
Written by urgent.news from Handelsblatt's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.