I was initially hopeful that this would make it easier to hedge. In the video, the CEO of Horizion Funds talks about these funds bringing less volatility. He chooses his words carefully, knowing that the single inverse funds also slip considerably from a direct inverse releationship. I plotted the S&P single inverse short ETF against the index. Here are the results. Plug in virtually any period and you can see the lag.jwr wrote:BetaPro Management Inc. Announces Launch of Single Inverse Horizons BetaPro ETFs
Horizon Funds
- SoninlawofGus
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- parvus
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No, it's not. It's a short-term trading instrument, to the degree one has a "view" on the market. In general, leveraged ETFs are not long-term buys because they are based on futures contracts or swaps. That means the value is not cumulative, that is, built up day by day, through all the highs and lows.
Instead, at the end of each trading day, you are, effectively, cashed out of the market. Your cash is then reinvested first thing on the trading day, and then cashed out again. So you're not going to participate in dividends, nor have them reinvested, for example. You are not going to be able to dollar-cost average, either.
You may wish to scan this thread.
Instead, at the end of each trading day, you are, effectively, cashed out of the market. Your cash is then reinvested first thing on the trading day, and then cashed out again. So you're not going to participate in dividends, nor have them reinvested, for example. You are not going to be able to dollar-cost average, either.
You may wish to scan this thread.
Last edited by parvus on 04 Jun 2009 22:31, edited 1 time in total.
Wovon man nicht sprechen kann, darüber muß man schweigen — a wit
finiki, the Canadian financial wiki Your go-to guide for financial basics
finiki, the Canadian financial wiki Your go-to guide for financial basics
I was aware of the leverage ,hedging , futures , swaps etc but I had no idea that they are cashed out daily & re-invested the next day to basically do the same thing all over again i.e achieve the funds objective on a daily basis .
( + 2x or -2 X or whatever the case might be )
Also I didn't know that they are non-cumulative .
I guess I will be reading the prospectus thoroughly before investing in any of them .
The thread you pointed out is interesting especially the leverage trap .
( + 2x or -2 X or whatever the case might be )
Also I didn't know that they are non-cumulative .
I guess I will be reading the prospectus thoroughly before investing in any of them .
The thread you pointed out is interesting especially the leverage trap .
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The danger of leveraged ETFs
FAIR Canada, a new group that speaks for investors, doesn’t want to see leveraged ETFs sold to the buy and hold crowd. Check out its its investor alert, which is very readable. The advocacy group is asking securities regulators to beef up prospectus disclosure... Now the Investment Industry Regulatory Organization of Canada has put out its own warning to investment dealers, as has a U.S. financial regulator.
Sedulously eschew obfuscatory hyperverbosity and prolixity.
Bylo thanks for posting these articles .Bylo Selhi wrote:The danger of leveraged ETFsFAIR Canada, a new group that speaks for investors, doesn’t want to see leveraged ETFs sold to the buy and hold crowd. Check out its its investor alert, which is very readable. The advocacy group is asking securities regulators to beef up prospectus disclosure... Now the Investment Industry Regulatory Organization of Canada has put out its own warning to investment dealers, as has a U.S. financial regulator.
- parvus
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On inverse ETFs, there's been a lot of news, including this item:
Obviously, there's a broader discussion of investor education that needs to be tapped, not just prospective risk management and how much can be communicated through prospectuses (which, I'll bet, few investors read, and which, at the same time, contain all the obligatory — and self-exculpatory — boilerplate from the law firms).
I am doubtful that the new IIROC guidelines will make a whit of difference as to how investors will try to play market trends: leveraged or unleveraged ETFs. For far too many "investors," whether it's corporate bonds, small-cap stocks or real estate, it's a loaded revolver with only one blank. (There must be a Paul Simon song here about 50 ways to lever your loves "50 ways to lose your wealth.")
(And I hated that song, when I was growing up!)
On Yamada's shop, there's this. I find all of this fascinating because he's among three or four Toronto-area managers that are using passive ETFs actively, some of whose names have cropped up here before, e.g., Venable Park, perhaps Wilfred Hahn.Inverse exchange-traded funds, such as those offered by Horizons BetaPro in Canada, or Rydex in the U.S., offer a double, or sometimes a triple, exposure to market movements — on the long side, and on the short side. Some investors have found, to their chagrin, that they haven't received nearly that profit, and in fact have lagged the index returns by considerable margins.
There are two basic reasons for this. The first is that inverse ETFs rely on futures contracts that are settled at the end of the day. The next morning is a fresh start. The investor gets double the exposure, bearish or bullish, for that particular day, and that day only.
The second reason is that markets may not trend. A trending market — bull or bear, sees consistent, albeit non-cumulative gains on one side of the trade. A volatile market with no consistent direction, however, offers something different, deep disappointment probably being foremost.
"There are bodies and scar tissue all over the place to show this," says Mark Yamada, president and CEO of Pur Investing, a Toronto ETF shop.
Obviously, there's a broader discussion of investor education that needs to be tapped, not just prospective risk management and how much can be communicated through prospectuses (which, I'll bet, few investors read, and which, at the same time, contain all the obligatory — and self-exculpatory — boilerplate from the law firms).
I am doubtful that the new IIROC guidelines will make a whit of difference as to how investors will try to play market trends: leveraged or unleveraged ETFs. For far too many "investors," whether it's corporate bonds, small-cap stocks or real estate, it's a loaded revolver with only one blank. (There must be a Paul Simon song here about 50 ways to lever your loves "50 ways to lose your wealth.")
(And I hated that song, when I was growing up!)
Wovon man nicht sprechen kann, darüber muß man schweigen — a wit
finiki, the Canadian financial wiki Your go-to guide for financial basics
finiki, the Canadian financial wiki Your go-to guide for financial basics
Parvus excellent post as usual . I just have one brief comment. I just can't see how advisors can recommend these HBP etfs to their clients ?
If these HBP etfs are only useful as basically daytrading securities then that means that the advisors would have to watch these HBP etfs every day. Most advisors recommend securities that are more buy and hold in nature. This gives the advisors time to prospect for new clients.
If a successful advisor has for example 300 clients then they don't have the time to adjust each individual clients portfolio daily. IMHO hbp etfs are very similar to options. I would say that most advisors don't get their clients invested in options either for the very same reasons as I mentioned above.
I agree with you that most clients don't read the prospectus. I think the reason why the hbp etfs are popular are for the same reason that going to the casino is popular. It's potential instant investment gratification. If you make a correct call on a hbp etf you have the potential to make 50% on your money in as little as a couple of trading days.
If these HBP etfs are only useful as basically daytrading securities then that means that the advisors would have to watch these HBP etfs every day. Most advisors recommend securities that are more buy and hold in nature. This gives the advisors time to prospect for new clients.
If a successful advisor has for example 300 clients then they don't have the time to adjust each individual clients portfolio daily. IMHO hbp etfs are very similar to options. I would say that most advisors don't get their clients invested in options either for the very same reasons as I mentioned above.
I agree with you that most clients don't read the prospectus. I think the reason why the hbp etfs are popular are for the same reason that going to the casino is popular. It's potential instant investment gratification. If you make a correct call on a hbp etf you have the potential to make 50% on your money in as little as a couple of trading days.
TD Waterhouse Canada Inc. acquires thinkorswim Canada Inc.Lado wrote:I am in the process of setting up a thinkorswim account to execute these trades.
For the time being, thinkorswim Canada and TD Waterhouse Discount Brokerage will continue to operate independently. As a result, this acquisition will have no immediate impact on thinkorswim Canada clients, who will continue to access their accounts and services in the same manner as before.
The terms of the transaction were not disclosed.
HNU- sell or hold ?
I have my HNU @ $6.10. put my limit order to sell @$ 6.30 on 25th june09 but the highest price on that day was 6.28.and on again 26th my quote was 6.50 but the highest price was 6.48. what a bad luck? there after it start decline and it stands at 5.10. I am afraid and feel it may go further go down
Is it good hold for long for atleast 2 to 3 months to get my money without loss?
Is it good hold for long for atleast 2 to 3 months to get my money without loss?
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Re: HNU- sell or hold ?
No joy for Nat Gas yet, perhaps requires a hurricane in the gulf. Personally I'm waiting and watching but see no need to act on the long side so far, the gas "shorts" are winning the day.clinton wrote:I have my HNU @ $6.10. put my limit order to sell @$ 6.30 on 25th june09 but the highest price on that day was 6.28.and on again 26th my quote was 6.50 but the highest price was 6.48. what a bad luck? there after it start decline and it stands at 5.10. I am afraid and feel it may go further go down
Is it good hold for long for atleast 2 to 3 months to get my money without loss?
If you haven't yet you might want to check out threads on leveraged ETFs here,
http://www.financialwisdomforum.org/for ... highlight=
and here,
http://www.financialwisdomforum.org/for ... p?t=106130
Last edited by Peculiar_Investor on 07 Feb 2014 07:04, edited 1 time in total.
Reason: replace old domain name with www.financialwisdomforum.org to reflect new domain name effective 19-Jan-2014
Reason: replace old domain name with www.financialwisdomforum.org to reflect new domain name effective 19-Jan-2014
Has HNU Bottomed ?
HNU Hit 52 week low today..has it bottomed or is it likely to go down even further .
Will natural gas keep on going down or will a busy hurricane season pop natural gas.
I am aware of the leverage trap , natural gas futures contracts , conatgo , backwardation etc...but I think HNU might be a good bet at 4.60..any thoughts on that are appreciated.
Will natural gas keep on going down or will a busy hurricane season pop natural gas.
I am aware of the leverage trap , natural gas futures contracts , conatgo , backwardation etc...but I think HNU might be a good bet at 4.60..any thoughts on that are appreciated.
Do you really need the leverage, if not something like GAS would let you have a longer time horizon. I too believe NG is going up so I bought TLM which is about 1/2 gas. However I used this method because they also have oil revenue so they will survive the 5-10yrs I think it will take for gas to recover.
newguy
newguy