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| Type | Master's Thesis |
| Scope | Discipline-based scholarship |
| Title | Should investors use leveraged ETFs to obtain leverage? |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 50 |
| Date | 2019 |
| Zusammenfassung | Leveraged exchange traded funds, henceforth LETFs, have become a popular instrument for short-term hedging and an option for retail investors to achieve significant exposure. This thesis explains and highlights two different options to achieve leverage for retail investors. The data basis includes 8 ETF quadruplets from 2008 until 2018. Tracking errors are found to be insignificant and long-term performances show little deviation from a theoretically leveraged position in low volatility environments. High margin costs, low returns and standard deviations, and longer holding periods increase the viability of long-term LETF portfolio holdings. The proposed alternative trading system failed to achieve absolute returns but showed beneficial risk-return characteristics. Nevertheless, LETFs may be a suitable alternative for retail investors to achieve desired leverage without using derivatives. |
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