Wednesday, May 3, 2017

"There Is Now A Quadruple-Leveraged S&P 500 ETF"

Huh. I guess that whole  
"And I looked, and behold a pale horse: and his name that sat on him was Death, and Hell followed with him." 
thing was right after all.

From ZeroHedge (last ZH link today):
Hitchhiker: You heard of this thing, the 8-Minute Abs?
Ted: Yeah, sure, 8-Minute Abs. Yeah, the excercise video.
Hitchhiker: Yeah, this is going to blow that right out of the water. Listen to this: 7... Minute... Abs.
Just like the infamous 7 Minute Abs scene from Something about Mary, many had wondered for years why there is no ETF that allows retail investors to lose money even faster than with the existing inventory of various triple-leveraged passive investing offering.
Well, as of last night there is.

On Tuesday, the SEC ignored numerous complaints, and approved a request to trade quadruple-leveraged exchange-traded funds, the first product of its kind, and one which will spawn hundreds of copycat imitators promising even greater possible returns and instead delivering theta that is guaranteed to wipe out virtually anyone who allocates capital to the product.

The request to list ForceShares Daily 4X US Market Futures Long Fund, under the ticker UP, and ForceShares Daily 4X US Market Futures Short Fund, under the far more appropriate ticker DOWN, was filed by the NYSE Arca exchange. One of the funds is designed to deliver 400 percent of the daily performance of S&P 500 stock index futures, while another fund will aim to deliver four times the inverse of that benchmark. That means that - in theory - a fund could go up 8 percent on a day the index it tracks falls by 2 percent. However, due to the rebalancing nature of such products, it most likely won't, and instead will be used as another massively shorted vehicle by all those pension funds who scramble to capture the volatility roll "dividend" from markets that no longer see any risk, anywhere.

"We're excited about it," said Sam Masucci, chief executive officer at Exchange Traded Managers Group LLC, which is distributing the product, though he said the product is "not going to be for everybody. "But for those people that are looking for the leveraged exposure to the S&P and they're not looking to do it by way of a futures product here you have a publicly listed security," Masucci said....MORE
Read on, it just gets better and better.