Last week we published a note, Divergence: Problems of Leveraged ETFs, and this got a lot of attention. The subject of the piece was the idea that leveraged ETFs are not suitable as buy-and-hold investments, but rather as short term portfolio insurance or day bets for or against the market.
The problem with these things is the math. Once you get past a few days, the gap between the leveraged ETF and the underlying index starts to widen. Its appears these innovations may only be suitable for very short term exposure, day trades and/or day-to-day portfolio insurance.
This week we feature Howard Atkinson from Horizons BetaPro, the leading Canadian issuer of Leveraged ETFs, who appeared in an interview with Jonathan Chevreau to set the record straight about these controversial relatively new investment vehicles.
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