How do leveraged ETFs compound volatility? (SPXL)

June 30, 2024 No Comments

A: Leveraged ETFs often advertise their volatility versus a tracked index with the multiple included in the name of the fund. For example, an investor who buys the Direxion S&P 500 Bull 3x ETF (NYSEARCA: SPXL) assumes that the fund triples the volatility of that

How do you calculate the excess return of an ETF or indexed mutual fund?

June 30, 2024 No Comments

A: For exchange-traded funds (ETFs), the excess return should be equal to the risk-adjusted (or beta) measure that exceeds the instrument’s benchmark or annual expense ratio. It’s easy to assess index mutual funds against the benchmark index: just subtract the benchmark’s total return from the

Are ETFs considered derivatives?

June 30, 2024 No Comments

Most exchange-traded funds (ETFs) are not considered to be derivatives. In the aftermath of the 2008 financial crisis, many pundits pointed the finger of blame at derivatives and financial engineering as the primary causes of the market collapse. As a result, many investors have shied

Are there leveraged ETFs that track the banking sector?

June 30, 2024 No Comments

A: A number of exchange-traded funds (ETFs) track the banking sector. Among them are ProShares Ultra KBW Regional Banking, ProShares UltraPro Short Financials, ProShares UltraPro Financials, Direxion Daily Financial Bull 3X Shares and Direxion Daily Financial Bear 3X Shares. ProShares is a leading company offering

Are Vanguard ETFs commission-free?

June 30, 2024 No Comments

A: While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion still bear commissions. Whether a particular ETF is commission-free depends on the investment broker platform. However, buying Vanguard ETFs through the Vanguard investment platform comes free of any trading

book value per common share & NAV (net asset value)

June 30, 2024 No Comments

A: Book value per common share, also known as book value per equity of share or BVPS, is used to evaluate the stock price of an individual company, whereas net asset value, or NAV, is used as a measure for evaluating all of the equity

Do ETFs pay capital gains?

June 30, 2024 No Comments

A: Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering a taxable event. Although very rare, ETFs have capital gains from time to time due to one-time large transactions or unforeseen circumstances. Because ETFs are structured as

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