A. No. Leveraged ETFs don't deliver as a long term investor might expect. Let's use the S&P 500 Bull 3x ETF SPXL as an example to illustrate:
As of May 23, 2014
S&P 500 SPXL (3x) Expected Return Actual Return Source: Yahoo Finance | 1-year 20.31% 60.93% 64.12% | 3-year 13.69% 41.07% 30.26% | 5-year 19.00% 57.00% 51.42% |
We will analyze each of the key reasons in the next two blog posts.