Is there Time Decay for Ultra ETFs?

[WinstonTJ]

Quote from tradingmonkey:

Please give me an example of a leveraged ETF that doesnt suffer from volatility induced tracking errrors.

Are you sure you aren't referring to daily compounding which is magnified by volatility?

I know the 3x ETFs actually track quite well - I'm talking about the closing NAV versus the index/benchmark they track. If you are talking about intra-day pricing, that too tracks quite well, just take any ETF ticker and put .IV at the end of it.

You may be either confusing magnified compounding due to volitility or secondary market intra-day share price premium/discounts but the funds (ETFs) themselves do track quite well.

 

[CET]

IMO these are for trading and not for investing. You also need to be aware of distribution dates if you hold overnight.

 

[FanOfFridays]

Quote from CET:
IMO these are for trading and not for investing. You also need to be aware of distribution dates if you hold overnight.

CET, in my other thread re: investing in oil over the longer term, you said

When USO began trading it was basically the same price as oil futures. I believe this was in the $69 area, but you can check for yourself. If you compare the price of the front month of oil futures now versus USO you see the expense of futures eroding the value of USO. You also are relying on the clowns managing the USO ETF to minimize expenses. Based on how I have seen USO trade, it is only good for short term trading. It can trade down when oil futures are up, and I don't recommend it around the time of roll over of contracts. You may also want to check out a few of the ultra (leveraged) oil ETFs, such as UCO and DXO.

I can't quite reconcile your comments about checking out UCO and DXO as longer term investment vehicles for oil with your comments here about Ultra ETFs being more for trading than investing. Can you straighten me out?

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Sorry, hope this isn't a threadjack. I have another thread going here in case anyone can comment about going long oil longer term.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=153249