Exchange-Traded Funds (ETF) were once bundles of stocks designed for steady, long-term growth. Not anymore.
Leveraged ETFs have emerged as high-octane funds delivering double or triple daily returns. Think espresso- spiked martinis in financial form. Exciting? Absolutely. Smart? That’s debatable.
In 2024 alone, 740 new ETFs launched in the U.S. — a sharp increase from previous years. Despite holding just 8% of market share, they captured 26% of new net flows. Some chase hot trends — AI chips, cryptocurrency. Others? They bet against other funds entirely. “Reverse ETFs,” as they’re called, exemplify this Wall Street-meets-Vegas mentality with Broadway-level drama.
But here’s the problem: these aren’t core portfolio material. High fees plague them. Wild daily swings define them. Capital can vanish faster than you can say “market correction.” Worse still, extreme cases might trigger broader financial system shockwaves.
Wealthy investors now treat leveraged ETFs like badges of sophistication — rare wines for the modern portfolio. Yet when leverage meets volatility, one truth remains constant: the casino always takes its cut.
Photos Courtesy Of: Shutterstock
