There is an awful lot of hate out there for leveraged ETFs. Microcap Speculator identified the Direxion 3X ETFs as “Wealth Destroyers.” Jim Cramer called the Ultrashort Financials ProShares (SKF) the “ETF of mass banking destruction.”
But the fact is that leveraged ETFs are nothing but a financial tool, which like any other, can be used either responsibly or recklessly.
The best known and most-criticized leveraged ETFs are Direxion’s Russell 1000 Financials Bullish 3X ETF (FAS) and Russell 1000 Financials Bearish 3X ETF (FAZ), which aim to return triple the daily return of the Russell 1000 Financials Index in either a positive or negative direction.
Investors who play with these are 100% aware that they are playing with fire and have nothing to complain about when they lose money with them.