Horizons BetaPro Exchange Traded Funds

More on the ETFs, specifically the Horizons offerings.

Here is a link to their website for any who want to do more reading:

Horizons BetaPro ETFs

Something that I did not mention in my last post was how these folks are doing what they are doing. Unlike a typical fund, like a mutual fund, they are not buying a bunch of stocks in the index to emulate the index, nor are they buying any of the underlying commodities. They deal in futures contracts instead...due to a few reasons that they mention in their FAQ.

Here is a complete list of their products:

Horizons BetaPro ETF Summary

I just did a quick check on a leverage comparison for HGU and Global Gold. (GG)

Since Oct 25th (I just picked a nice long gain as an example) to Feb 11th

GG gained $187.55 or 123%
HGU gained $11.18 or 286%

There is mention of rebalancing and daily valuation of the fund, so I suppose this seeming disparity comes from the effect of some level of compounding at work, and it was mentioned on the HBP site but I discounted it as marketing hyperbole...perhaps not.

This does make a good case for beating the market performance. Seeing as 123% is still a good return for a 3 month investment, 246% would be spectacular and an extra 40% definitely adds a bit of gravy. I expect something similar following the HGD bear fund in a down turn...

Jul 15th to October 26th, another arbitrary period the GG dropped over three months.

GG lost $224.14 or 81.3%
HGD gained $68.45 or 187%

Well, considering that gold was dropping, overall, this is a great way to turn the loss on it's head.

Interesting is that the additional gain over the straight 2x leverage is 15% greater than the leveraged percentage return.

None of this makes much difference in my daytrading scenario but certainly makes a great case for using ETFs in my future longer term investments.

From the listing of ETFs that Horizons has you can do the exact same thing with financials, oil, energy, bonds and other popular indexs. I was playing with HGD as a bear strategy against the true stock TLM (Talisman Energy) and earlier I was playing with HGD again AEM (Agnico Mines). I now firmly believe that I have found an alternative to stocks completely.

The funny thing is that six months ago I would have scoffed at the idea of trading ETFs.

Jeff.