The SEC's approval of individual stock ETFs aims to provide leveraged investment opportunities, reflecting a stock's daily performance and appealing to investors during high-interest rates.
MicroStrategy's new leveraged ETF, MSTX, offers investors a chance to gain 175% of the stock's daily performance, targeting those looking to capitalize on Bitcoin's growth.
Despite their allure, leveraged ETFs suffer from decay, worsening returns over time due to market volatility, making them unsuitable for long-term investors.
The ProShares UltraPro S&P 500 ETF (UPRO) exemplifies the decay issue, as it struggles to maintain value against earlier highs experienced in 2022.
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