Leveraged ETF Performance & Decay Illustrator
General Information & ETF Setup
E.g., 252 for daily, 12 for monthly, 52 for weekly returns input.Underlying Index Performance Input
Separate values by new lines or commas. Example: +1%, -0.5%, +2%, -1.5%, +0.8%.
Important Understanding for Leveraged ETFs:
- Leveraged ETFs aim to achieve a multiple (e.g., 2x, 3x, -1x, -2x) of the return of an underlying index for a **single day (or period of rebalancing)**.
- Compounding/Volatility Decay: Over periods longer than one day, their performance can significantly differ from simply multiplying the index's cumulative return by the leverage factor. This is due to the daily rebalancing and the effects of compounding, especially in volatile (choppy) markets. In such markets, leveraged ETFs can lose value even if the underlying index is flat or slightly up over time.
- Expense Ratios: Leveraged ETFs typically have higher expense ratios, which further erode returns over time. This calculator applies a simplified periodic deduction.
- Risks: These are complex instruments intended for sophisticated investors and generally for short-term trading, not long-term buy-and-hold strategies. They carry substantial risks, including the potential for rapid and significant losses.
- This simulation is for illustrative and educational purposes based on your hypothetical inputs. It does not predict future performance.