Monday, April 27, 2009

Daily MultiPeriod Performance of Leveraged ETFs

We look today at the average multiperiod daily performance of a couple of pairs of leveraged ETFs. The study was based on the daily closing prices of:

- FAS and FAZ, since inception on November 19 2008
- and since Jan. 2 2008.

We looked at the performance of holding these funds for 1 day, 2 days, 3 days, and so on all the way to 180 days, and also compare with XLF as well as the


(please click on images to enlarge)

On average, FAZ always lost money, even after holding for only 1 day. FAS does slightly little better, with a very minor gain after holding for up to 5 days. It is interesting to remember that one of these funds is a bear and the other one a bull. In comparison, XLF does much better than both of them, showing average gains up to 15 days.,

Similarly, on average HGD always lost money since Jan 2 2008, even after holding for only 1 day. HGU has a slight gain up to holding for only 2 days , then only losses.

This shows that it has not been good to hold these ETFs for more than 1 day, and again shows that on average most investors lose money with them, a fact which we already knew, but here is some proof - for the average investor.

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