Tradr ETFs has rolled out a group of eight leveraged exchange-traded funds (ETFs) designed to allow investors and speculators to hold on to them for a week or even a month, the company said on Sept 3.
The move is a bid to shake up the growing universe of leveraged and inverse ETFs that allow investors to capture up to three times the return (or loss) of an underlying index or single stock and have attracted some $117 billion in assets, according to Morningstar. Until now, those products have offered users the chance to bet only the daily return of broad market products like the SPDR S&P 500 ETF Trust or volatile, heavily traded stocks like Nvidia
“The reality is that a sizeable percentage of people who own these actually don’t close out their positions at the end of a trading day,” said Matthew Markiewicz, head of product and capital markets at Tradr.
Hanging on to these leveraged products longer than a single day can make investors vulnerable to so-called “volatility drag,” a phenomenon that over time can magnify gains or losses even beyond the leverage the fund provides. That could compound losses in a down market, as exposure is reset daily.
Tradr has launched six new index-based products offering twice the daily returns on three major U.S. indexes, including the S&P 500, half of which will reset weekly and the others on a monthly basis. It also is introducing two single-stock leveraged ETFs, one designed to capture 1.75x the weekly return of Nvidia and the other to deliver 1.5x the weekly return of Tesla.
