Leveraged single-stock ETFs are here; reasons why long-term investors should stay away – The Average Joe
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    Leveraged single-stock ETFs are here; reasons why long-term investors should stay away

    victorlei

    July 14, 2022

    Financial companies are getting more creative in finding ways to help you YOLO your money.

    America just got its first leveraged single-stock ETFs. Yesterday, AXS Investments launched eight different single-stock inverse or leveraged ETFs, including:

    • AXS 2X NKE Bear Daily ETF (NASDAQ:NKEQ) — aims for 2x the return of Nike (NYSE:NKE).
    • AXS 1.5X PYPL Bull Daily ETF (NASDAQ:PYPT) — aims for 1.5x the return of PayPal (NASDAQ:PYPL).

    Want to bet against Tesla? There’s the AXS TSLA Bear Daily ETF (NASDAQ:TSLQ). See others here.

    BEWARE: Leverage can blow up portfolios, use at your own risk.

    • Leverage works wonders on the way up. Why get 1x return when you can get three times the amount? But when prices drop, the losses are also amplified.
    • They’re not meant to be long-term “set it and forget it” investments. In a sideways market, leveraged ETFs can, in theory, perform even worse.

    The SEC warned of the risks of these productions, but they were approved regardless. The funds also carry a high 1.15% expense fee.

    Leveraged ETFs have grown in popularity — doubling in assets in 2020. Direxion is one of the most popular leveraged ETF providers — offering various sector-focused leveraged ETFs.

    The real degen question: When is the AMC 3x-leveraged ETF coming?

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