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What will happen if I hold this ETF for a month?

Mutual Funds, Hedge Funds and ETFs

What will happen if I hold this ETF for a month?

Postby burke5 » Mon Apr 22, 2013 9:50 pm

What will happen if I hold this ETF for a month? Will I lose money?
ProShares UltraShort DJ-UBS Natural Gas (KOLD)
burke5
 
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What will happen if I hold this ETF for a month?

Postby ciaran » Mon Apr 22, 2013 10:15 pm

Hi,

Ultra short ETFs , Short ETFs and also all types of leveraged ETF are not good vehicle for longer term holding. The construction of these exchange traded funds is based on some formula that has some disadvantages for buy-and-hold investors.

So one month could be too much. I would prefer to hold such leveraged and short ETfs for days or two weeks max.

When I want to short some instrument then I prefer to use standard ETF and then use sell short strategy. It is much better solution for position trades that could last several weeks or few months.

Richard
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What will happen if I hold this ETF for a month?

Postby taye » Mon Apr 22, 2013 10:26 pm

Hi,

Ultra short ETFs , Short ETFs and also all types of leveraged ETF are not good vehicle for longer term holding. The construction of these exchange traded funds is based on some formula that has some disadvantages for buy-and-hold investors.

So one month could be too much. I would prefer to hold such leveraged and short ETfs for days or two weeks max.

When I want to short some instrument then I prefer to use standard ETF and then use sell short strategy. It is much better solution for position trades that could last several weeks or few months.

Richard
I personally think as they roll the contracts forward you will make money from the negative roll yield on the contangoed contracts.

I know - all the idiots who think they know something say "never hold these contracts long term, they are for short term trades". There is some truth in that but here the contango beats the rebalance anyday.
taye
 
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Joined: Tue Jun 26, 2012 12:19 am


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