LogFAQs > #963178022

theAteam posted...

It's the leveraged part that does it. These proshares/direxion 2x/3x ETFs use options to achieve multiple times the volatility of the underlying ETF. It makes great short term gains but also doubles or triples the losses if it goes against you. Because as your price decreases you need a larger % to get back to even, the long term performance is always steadily down.

If the underlying ETF goes from 100 to 90, a 2x leveraged ETF goes from 100 to 80 (2x the loss of 10). It then needs a 25% gain to get back to 100 vs. the underlying which only needs a 11% gain to get back to even.

I think the long term gains more than make up for those losses, particularly if the investor contributes regularly or DCAs.

UPRO seems like a safe long term investment, especially with a hedge and regular rebalancing.