Leveraged ETFs: return boosters?

Leveraged ETFs promise double returns – but what seems like a return booster can quickly turn into a return killer. What many investors underestimate: The leverage works in both directions, and the so-called volatility drag ensures that the math works against you.

How much does success depend on timing? What psychological strains come with extreme price fluctuations? And why do investors need significantly more patience after sharp downturns than with traditional ETFs? We shed light on the hidden pitfalls of these products and show for whom leveraged ETFs can still make sense as a portfolio addition – and when it’s better to steer clear.