I took an interest in mechanics of leveraged ETFs when I knew about two new products by direxion with exposition in RSX. I faced a huge number of critics on such investment products, also lot of critics on these critics. Even I found some strategies based on myths and misunderstanding these and similar financial instruments. I cannot say that leveraged products are better than investment without leverage exactly. As I can't conclude that leveraged products are better or worse leveraged exposition on underlying benchmark. It depend from investment policy of everyone, everyone's preferences which are different, as it well known.
Anyway usually conclusions are based on insufficient data. This can explain why some myths are so popular and why there are to many misunderstandings. I point on effect of leverage. When we judge some investment product we compare it with related benchmark. Usually we either watch changes in final worth or study compound rate of return. At the practice (and at theory too) leveraged scheme can not beat its own unleveraged underlying very often. But it does not mean that future value of worth (expected value) suffer from leverage definitely.
Anyway usually conclusions are based on insufficient data. This can explain why some myths are so popular and why there are to many misunderstandings. I point on effect of leverage. When we judge some investment product we compare it with related benchmark. Usually we either watch changes in final worth or study compound rate of return. At the practice (and at theory too) leveraged scheme can not beat its own unleveraged underlying very often. But it does not mean that future value of worth (expected value) suffer from leverage definitely.
