Investors lose $ 25 billion in leverage ETFs in the largest meltdown of the sector

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At the end of last week, investors lost $ 25.7 billion of web stock exchange funds, in the largest minor down for risky funds that have drawn great tribes from retail dealers in recent years who have strived for quick returns.

The highly oktan funds, which enlarge the daily returns of individual stocks or indices up to five times, lost almost a quarter of their value on Thursday and Friday, since according to the calculations by calculations by Donald Trump’s trade war and the dissolution of the financial markets.

This in the shadows placed the earlier worst losses in reactions, two separate days in the Covid-19 accident in March 2020 when Leveraged ETFS lost 9.1 billion USD or 5.6 billion USD, and the “volume sum” from 2018, as an extreme rise of volatility led to great losses for ETFs with short volatility.

The global stock markets fell over three trading days from Thursday to Monday, after a wave of so -called “mutual tariffs” came into force against dozens of the trade partners of the United States on Wednesday.

The plans are announced in addition to a universal tariff of 10 percent of Trump’s “Liberation Day” last week.

The losses underline the risks for retail investors in the rapidly growing sector, which has reached more than 650 funds worldwide since its introduction in 2006.

“These products are very sharp knives,” said Elisabeth Kashhner, director of Global Fund Analytics at Factset. “They should be used for very specific purposes, and the people they use have to know what they are doing.”

The largest percentage loss was reduced by the 4x long semiconductor ETP, based in Ireland, which, according to the fact set, impressed 59.1 percent in two days in two days.

Three other lever shares ETFS – 5x long Magnificent 7, 3x Boeing and 3x arm – lost more than 50 percent.

In US dollars, the largest loser under lived ETFs from USD 20 billion in the USA was ProShares UltraPro QQQ, based on the technological driving damage NASDAQ index, which lost $ 6.3 billion.

“It is really only about semiconductor and technology, and the largest percentage losses are individual stocks,” said Kashner. “Some did a great job to lose money.”

Although the United States has by far the largest market for lever, the leverage effect is limited three times, which limits the losses a fraction. There is no indication that one of the ETFs did not behave as intended.

Kenneth Lamont, Principal of Research at Morningstar, said that retail investors were particularly susceptible to sharp losses of such products with high risk. “You don’t have all the advantages of a large institution, and the chances are that you have no advantage. A product that you can use to triple your bet may not be the best idea,” he added.