Posted by pthoreson on 21st of Aug 2008 at 12:21 pm
There have been many who have questioned whether the performance
of the 2x funds measures up claims. Remember, these are designed
for DAILY returns of 2x the reference index. Over time, the return
cannot equal 2x - it is a mathmetical impossibility. The reasons
have been explained and quantified on several boards, including
SKF, DUG and others.
These ETF's are designed to be used as hedges and as trading
vehicles, not as long term holds. If used in that manner they work
out just fine. But if you compare an index value on a certain date
with the ETF price, then look 6 months later at the same index at
the same level vs the ETF, you will see a difference.
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DIG and DUG Question
Posted by pthoreson on 21st of Aug 2008 at 12:21 pm
There have been many who have questioned whether the performance of the 2x funds measures up claims. Remember, these are designed for DAILY returns of 2x the reference index. Over time, the return cannot equal 2x - it is a mathmetical impossibility. The reasons have been explained and quantified on several boards, including SKF, DUG and others.
These ETF's are designed to be used as hedges and as trading vehicles, not as long term holds. If used in that manner they work out just fine. But if you compare an index value on a certain date with the ETF price, then look 6 months later at the same index at the same level vs the ETF, you will see a difference.