3x Leveraged Commodity

3X leveraged commodity mutual funds and ETFs are designed to offer three... 3X leveraged commodity mutual funds and ETFs are designed to offer three times the daily return of a particular commodity futures price. For example, if silver futures rise 1% on a given day, a 3% bull ETF linked to silver futures should rise 3%. On the other hand, if silver futures fall 1%, this same fund should decline by 3%. To achieve their objectives, 3X leveraged commodity mutual funds and ETFs enter into derivative contracts with banks and other financial institutions. It's important to note that these funds are only meant for very-short term trading. Because they are rebalanced daily depending on market fluctuations, 3X leveraged funds may not produce the same result if held for weeks, months or longer. In fact, it’s very likely that one of these funds may fall in value considerably over a longer period, even if the underlying market rises. In addition, it’s crucial to know that if a commodity future falls by 33% or more in a given day, the entire value of a 3X fund will probably be wiped out. As a result, these are attractive for short-term traders with a very large appetite for risk. Last Updated: 04/19/2024 View more View less

3X leveraged commodity mutual funds and ETFs are designed to offer three times the daily return of a particular commodity futures price. For example, if silver futures rise 1% on a given day,... 3X leveraged commodity mutual funds and ETFs are designed to offer three times the daily return of a particular commodity futures price. For example, if silver futures rise 1% on a given day, a 3% bull ETF linked to silver futures should rise 3%. On the other hand, if silver futures fall 1%, this same fund should decline by 3%. To achieve their objectives, 3X leveraged commodity mutual funds and ETFs enter into derivative contracts with banks and other financial institutions. It's important to note that these funds are only meant for very-short term trading. Because they are rebalanced daily depending on market fluctuations, 3X leveraged funds may not produce the same result if held for weeks, months or longer. In fact, it’s very likely that one of these funds may fall in value considerably over a longer period, even if the underlying market rises. In addition, it’s crucial to know that if a commodity future falls by 33% or more in a given day, the entire value of a 3X fund will probably be wiped out. As a result, these are attractive for short-term traders with a very large appetite for risk. Last Updated: 04/19/2024 View more View less