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UBS ETRACS Mthly Py 2xLvg Closed-End ETN Message Board

  • mauihope2000 mauihope2000 Jan 27, 2014 7:27 PM Flag

    The 2x effect

    There is long term historical data available even though the index has only been around for a few months.
    Go to "ISE ETF Ventures High Income Index" and click on historical. They have extrapolated the data. What you will see is: if you invested $100 in the index on 12/31/03 by Nov 20 '08 your investment would have been worth $47. A 50+% loss.
    What that tells us is that $100 invested here(if it existed) at 2x, even reinvesting 100% of the dividends, would have had a share price of about $0 on that date.
    Not suggesting that history will repeat but it is something to consider.
    All the 2x and 3x funds I've looked at tend to underperform their index over time and the further you go out in time the greater the underperformance.
    Not a bash I'm still looking at this.
    YYY(the unleveraged index) looks better to me even with just a 10% yield. The index itself already has about 30% leverage.
    Just my worthless opinion. No position.

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