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Why Short Sector ETFs Aren't So Smart

Submitted by WSN_Staff on Wed, 12/24/2008 - 14:01.
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Investing Ideas (2)

Great article on theStreet.com by Eric Oberg - Given that the double-levered long-side ProShares Ultra Real Estate ETF (URE) was down nearly 80%, one would expect its complement (the ProShares UltraShort Real Estate ETF (SRS)) to be up 80% instead of losing nearly half of its value, given they are based on the exact same index, right?

The same goes with the financial sector ETFs. Given that the double-levered, long-sided ProShares Ultra Financial ETF (UYG) was down nearly 85%, you'd expect its complement (the ProShares UltraShort Financial (SKF)) to be up 85% rather than flat. As the car rental commercial says, "Not exactly..." 

The short sector ETFs are causing more pain than gain for all of us, enjoy the article, its worth your time:

Click to Read at theStreet.com

 

How Short ETFs Can Work Against You
ETF
Jan 2, 2008 close
Dec 17, 2008 close
YTD Return
URE (2x long RE)
33.15
6.70
-79.8%
SRS (2x short RE)
110.42
57.19
-48.2%
DJ US RE index
605.69
368
-39.2%
 
UYG (2x long Fin)
39.22
6.09
-84.5%
SKF (2x short Fin)
104.00
105.47
+1.4%
DJ US Fin index
683.8
346.9
-49.3%

SOURCE: http://www.thestreet.com/story/10454678/1/why-short-sector-etfs-arent-so...

 

 

 

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