Thanks for the link and the insights, I just did a small toy calculation to check and my intuition was wrong: There seems to be much more to leveraged ETFs, like you say!
Florian H
Karma: 10
If I understand correctly your analysis shows that the strategy with leveraged ETFs outperforms the strategy without leverage (and is indeed comparable to leverage on margin). Is there an underlying frequent rebalancing or other effect that I am missing?
My understanding was that leveraged ETFs are only useful for day trading and not for long-term buy-and-hold because of the internal re-adjustment to the index each day. If that holds then I would expect the better returns you show to be an artefact of the chosen time period, but find it still surprising!
This is very similar to how the electrical energy market promotes sustainable energy in Europe: Certificates for sustainable generation of energy are traded alongside the actual energy (e.g. wind or solar certificates). Utilities / companies and by extension households can then buy the certificates alongside the energy to fulfil individual sustainability demands.
That concept is successful to a large extend, there is high demand for certain kinds of certificates and a sizeable market has formed around it.