Short Leveraged index ETF FTSE 100

[Don17]

Hi all, I had some good success in 2015/2016 playing with Boost’s 3UKL.L (3xFTSE 100 return) and the opposite/short version (3UKS.L).

However I got caught out and my bets on 3UKS.L (3x shorting the FTSE 100) in Dec 2016 did not pay off as the market surged ahead past 7,000 to its recent peak and i was carrying heavy losses.

However with the FTSE 100 now back to the level where I purchased the 3UKS.L, I would have expected to be close to break even. However I’m sitting on 20% losses which I can’t get my head around!

Could anyone explain to me as the logic has more or less worked in 2015/16. I can understand a few % difference but not 20%.

 

[Hoggums]

I don't know anything about these ETFs - so I may be wrong - but it's probably an adjustment for dividends over that time and also interest on the leverage. (to get 3x return you will need to borrow an extra 2x your investment).

When you are short of an index the value will be adjusted to take account of the dividends that were paid by shares within the index - you are short of the index so therefore you are also "short" of the dividend payouts - i.e. you have to pay them somehow - in this case the fund value is adjusted to take account of this.

 

[Don17]

Hi thanks for the reply, however I invested in both the Short Dax 3x and Short FTSE 3x. The Dax ETF has tracked somewhat sensibly although not exactly (probably for the reasons you mentioned), however the FTSE ETF is no where near which is why I’m so perplexed. Is there something I am missing as both indexes have moved in similar fashions during the time period. I know we will never be able to get exactly the same numbers but I am way off on the FTS3 ETF.