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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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From: redfrecknj	5/29/2006 10:33:33 PM
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ProFunds prepares first leveraged ETFs Article found here: tinyurl.com Snipped.... " The planned ProFunds offerings cover three basic approaches. The first is a "bullish" ETF uses leverage to double the market's normal return. For example, if the S&P 500 index rose 2% in a day, the corresponding ProFunds ETF is designed to give investors a 4% return. Second is a "bearish" strategy that aims to deliver the exact opposite, or inverse, of the market's return. Accordingly, if the index declines 2%, then the inverse ETF aims for a positive 2% return. Finally, a leveraged "ultra-short" bearish fund seeks to provide twice the opposite of the market's return. So in the case of a 2% market decline, this portfolio would gain 4%." "High-octane ETFs like those proposed by ProFunds have been expected, but some analysts advise treading carefully here because these investments can magnify losses as well as gains. Additionally, many question the need for such offerings since investors can already short ETFs or buy them on margin, since they trade like stocks."

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