Is seeking to achieve returns close to the daily target over time the only reason to invest in leveraged and inverse funds over longer periods?
Leveraged and inverse funds can be used to implement a variety of short- and longer-term strategies. For instance, an investor may choose to hold a longer-term position in a leveraged or inverse fund based on a view that the index will trend upward or downward in a low-volatility environment. If the investor is correct, this could result in leveraged or inverse fund performance higher than the index return times the fund multiple. However, if incorrect, the fund returns could be lower—perhaps significantly. Leveraged and inverse fund positions should be monitored frequently.
