Thursday, August 28, 2025
  • About
  • Write for us
  • Contact
Today News
  • Business
  • Tech
    Artificial intelligence displayed on a vintage typewriter with the words "Artificial Intelligence"

    Artificial intelligence — The New Language of Tomorrow’s Economy, According to Aleksandr Katsuba

    Windows 11 Safely

    How to Download and Install KMSpico on Windows 11 Safely (Step-by-Step Guide with Alternatives)

    tech

    The Rise of Minimalist Tech: Why Consumers Are Choosing Compact Gadgets

    Revolutionizing

    How Technology Is Revolutionizing the Way We Travel

    Online Casino Game

    The iGaming software provider matters: Is it the best way for online casinos to achieve long-term success?

    Casino Slot Game

    Find Legit AU Online Casinos | Safe Gambling Guide

    Baby Sleeping Peacefully

    Understanding the Baby Monitor Market: What’s Driving Growth and Innovation

    Artificial Intelligence

    Europe’s AI Act Enters New Phase

    Close-up of a laptop screen displaying lines of code in a text editor, highlighting programming work in progress.

    How Technology Innovations Are Redefining Online Casinos and Sports Betting Experiences

  • Consumer
    Understanding the Baby Monitor Market: What’s Driving Growth and Innovation

    Understanding the Baby Monitor Market: What’s Driving Growth and Innovation

    Craving Connection: Why Food Gifting Is the New Love Language

    Craving Connection: Why Food Gifting Is the New Love Language

    How to Celebrate Milestones from Afar: The Rise of Digital Gifting in the UK

    How to Celebrate Milestones from Afar: The Rise of Digital Gifting in the UK

    How to adjust glasses at home – a step-by-step guide!

    How to adjust glasses at home – a step-by-step guide!

    Why quality toilet cubicle hardware matters

    Why quality toilet cubicle hardware matters

    Common Mistakes in KYC Identity Verification

    Common Mistakes in KYC Identity Verification

    Consumer habits

    British Furniture Market Sees Significant Changes in Consumer Preferences

    Why are high-street bookmakers declining in the UK?

    Why are high-street bookmakers declining in the UK?

    Straps for smartwatches: The Complete guide

    Straps for smartwatches: The Complete guide

  • Finance
    Senior Citizen in a wheelchair

    How to Support and Manage Your Parents’ Financial Decisions Through Dementia

    Mobile Apps for Managing Finances: What to Choose in 2025

    Mobile Apps for Managing Finances: What to Choose in 2025

    Bank Branch Presence in the UK: Then and Now

    Bank Branch Presence in the UK: Then and Now

    Financial graph illustrating investment performance

    Tradock Explained | What This Trading Platform Offers

    Investment Graph in different device screens

    Quantiumax Reviews: What Makes This Broker the Best Choice Available

    Panoramic view of London's skyline featuring iconic buildings like the Shard and the London Eye against a clear sky

    Can London Still Compete with Silicon Valley and Berlin in Tech Investment?

    Using a Laptop

    How to Accept Altcoin Payments and Upgrade Your UX Strategy

    Crypto Loans Meet Open Banking: Will Hybrid Products Redefine Borrowing?

    Crypto Loans Meet Open Banking: Will Hybrid Products Redefine Borrowing?

    Fintevex.io vs The Rest: What Happened When We Put It to the Test

    Fintevex.io vs The Rest: What Happened When We Put It to the Test

  • Environment
    Five Ocean Discoveries That Could Change How We See the World

    Five Ocean Discoveries That Could Change How We See the World

    Choosing the Right Sustainability Partner: How Eco-Efficient Tech Transforms Industry

    Choosing the Right Sustainability Partner: How Eco-Efficient Tech Transforms Industry

    Moving Abroad? Here’s What to Expect – and Why Cardboard and Plastic Waste Removal Is Essential After Unpacking

    Moving Abroad? Here’s What to Expect – and Why Cardboard and Plastic Waste Removal Is Essential After Unpacking

    How Weather Events Like Heavy Rain or Heatwaves Affect Pest Activity

    How Weather Events Like Heavy Rain or Heatwaves Affect Pest Activity

    Building a Carbon-Competitive Advantage with Sustainability and Decarbonization Consulting

    Building a Carbon-Competitive Advantage with Sustainability and Decarbonization Consulting

    The Lost Art of Orienteering: Why Map and Compass Skills Still Matter

    The Lost Art of Orienteering: Why Map and Compass Skills Still Matter

    Sustainability in Dining: Reducing Waste for a More Profitable Future

    Sustainability in Dining: Reducing Waste for a More Profitable Future

    Environmental Benefits

    What Are The Environmental Benefits Of Choosing Eco-friendly Rubbish Removal In Croydon?

    Why You Should Hire Waste collectors for efficient waste removal

    Why You Should Hire Waste collectors for efficient waste removal

  • Property
    Close-up of Bungalow Houses

    The Key Reasons Park Bungalows Are A Smart Investment

    Discovering the Charlie Oven The Rural Ranges Ltd Approach

    Discovering the Charlie Oven The Rural Ranges Ltd Approach

    Sleek and Sturdy Bathroom Glass Shelves for Modern Homes

    Sleek and Sturdy Bathroom Glass Shelves for Modern Homes

    How to Streamline Your Home Expenses

    How to Streamline Your Home Expenses

    How To Plan Your Home Improvements in Six Easy Steps

    How To Plan Your Home Improvements in Six Easy Steps

    Budgeting for a House Sale: What Most Sellers Forget

    Budgeting for a House Sale: What Most Sellers Forget

    Home and business removals: Streamlining your move

    Home and business removals: Streamlining your move

    Maximizing Your Investments: A Guide to Purchasing Villas for Sale in Dubai 2025

    Maximizing Your Investments: A Guide to Purchasing Villas for Sale in Dubai 2025

    6 Common Admin Mistakes that Property Managers Make

    6 Common Admin Mistakes that Property Managers Make

  • eCommerce
    From 1688 to shopee: the singaporean seller’s guide to paying china suppliers

    From 1688 to shopee: the singaporean seller’s guide to paying china suppliers

    The Importance of Digital Valuations for UK Ecommerce Brands

    The Importance of Digital Valuations for UK Ecommerce Brands

    Blink-and-Buy: Designing Checkouts That Convert in Under 10 Seconds

    Blink-and-Buy: Designing Checkouts That Convert in Under 10 Seconds

    High Stakes Strategies: Lessons E-commerce Entrepreneurs Can Learn from Casinos

    High Stakes Strategies: Lessons E-commerce Entrepreneurs Can Learn from Casinos

    Amazon Expert

    Amazon Expert: Key Qualifications to Look For

    Boosting Ecommerce Revenue with Smart Targeting Strategies

    Boosting Ecommerce Revenue with Smart Targeting Strategies

    Personalized Shopping: How Technology is Transforming Retail

    Personalized Shopping: How Technology is Transforming Retail

    How Can Ecommerce Businesses Learn From Entertainment Platforms?

    How Can Ecommerce Businesses Learn From Entertainment Platforms?

    Magento Web Development Company: Unlocking the Power of E-Commerce

    Magento Web Development Company: Unlocking the Power of E-Commerce

No Result
View All Result
Today News
Home Finance

Volatility and Risk: Which Investment Vehicle Bears More Leverage-Related Risk?

David Prior by David Prior
December 16, 2024
Reading Time: 4 mins read
Aerial view of a parking lot with different parked cars
427
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Volatility and risk are intrinsic to investing, but the extent varies significantly across different investment vehicles, particularly concerning leverage-related risks. This article examines various financial instruments to determine which bears higher leverage-related risks, providing investors with a clearer understanding of where potential dangers and opportunities lie. Visit altrix-quantum.com to navigate through the volatility and risks of leveraged investments with the insights provided by partnered education firms.

Analysis of Volatility in Leveraged ETFs Compared to Leveraged Mutual Funds

Volatility is a crucial factor when comparing leveraged ETFs and leveraged mutual funds. Leveraged ETFs are designed to provide amplified returns—often 2x or 3x the daily performance of an index. This means if the market goes up 1%, a 2x leveraged ETF should ideally go up by 2%.

Related posts

Senior Citizen in a wheelchair

How to Support and Manage Your Parents’ Financial Decisions Through Dementia

August 26, 2025
556
Mobile Apps for Managing Finances: What to Choose in 2025

Mobile Apps for Managing Finances: What to Choose in 2025

August 22, 2025
416

But this comes at a cost—volatility tends to be much higher. Leveraged ETFs track daily market movements, which can lead to exaggerated results when the market fluctuates. If you hold these funds for longer periods, the effects of compounding can magnify losses even in a market that’s moving in your favor.

On the other hand, leveraged mutual funds typically aim to generate returns over longer periods, so they tend to manage volatility differently. These funds often adjust their leverage and positions over time, making them less prone to extreme short-term swings.

Think of leveraged ETFs as a roller coaster, while leveraged mutual funds are more like a bumpy road. Both have ups and downs, but ETFs can throw you around more.

One big difference lies in the reset period. Leveraged ETFs reset daily, making them more suitable for short-term bets rather than long-term holdings. Leveraged mutual funds, however, don’t have this daily reset, which can help reduce the immediate effects of volatility but still carries risk if the market takes a sharp downturn.

Risk Management Techniques: How Both Instruments Handle Downside Risk

Managing risk in leveraged investments is critical, especially when market conditions change rapidly. Leveraged ETFs use a variety of tools to manage risk, but their main characteristic—daily resetting—can lead to significant losses if markets swing wildly.

Because of this, investors using leveraged ETFs for long-term positions need to monitor them regularly and consider tools like stop-loss orders to limit their downside. Stop-loss orders can automatically sell the ETF if it drops below a set price, helping to minimize potential damage.

Leveraged mutual funds often employ more sophisticated risk management strategies. These funds are typically actively managed, meaning fund managers may adjust the fund’s exposure based on market trends. They might reduce leverage or shift to safer assets if they anticipate a downturn.

Imagine a tightrope walker carrying a safety net—mutual funds tend to have a few more built-in precautions. Some funds may also use options or other derivatives to hedge against potential losses, a strategy less common in leveraged ETFs, which are more passive by design.

For investors looking to manage risk, both leveraged ETFs and mutual funds can be useful, but the key is understanding your time horizon. If you’re aiming for a quick trade, a leveraged ETF might be appropriate, provided you watch it closely.

For those with a longer-term outlook, mutual funds may offer a more balanced approach, with active risk management built in. Either way, always consider your risk tolerance and consult a financial expert to help tailor your strategy.

Real-Life Case Studies on How Leveraged ETFs and Mutual Funds Behave During Market Swings

To see how leveraged ETFs and mutual funds behave during market turbulence, let’s look at a couple of examples from recent years. In 2020, when the COVID-19 pandemic triggered massive market volatility, many investors using leveraged ETFs experienced extreme losses.

Leveraged ETFs that tracked indices like the S&P 500 were hit hard. Because these ETFs reset daily, the sharp market drops compounded, turning short-term losses into devastating declines.

It’s a bit like being caught in a rip current—you think you’re swimming forward, but you’re getting pulled under. Some investors lost significant amounts of money as the market bounced back slowly, but the ETFs couldn’t recover as easily due to daily compounding effects.

On the flip side, certain leveraged mutual funds showed more resilience. For example, some actively managed funds reduced their exposure to risky assets and adjusted their leverage ratios as the pandemic unfolded.

This helped to cushion the blow during the steepest market declines. While they still incurred losses, they fared better than many leveraged ETFs, thanks to their flexibility in managing risk over time.

Another example is the financial crisis of 2008. Leveraged ETFs that tracked banking indices suffered heavy losses as the financial sector collapsed. However, some leveraged mutual funds were able to pivot to more defensive sectors, lessening the impact on investors.

These real-world events highlight how different these instruments behave in periods of high stress. Leveraged ETFs can be a double-edged sword—great for short-term trades but potentially disastrous if the market turns against you quickly.

Conclusion

Understanding leverage-related risks in various investment vehicles allows investors to make more informed decisions tailored to their risk tolerance. By dissecting the volatility and risks associated with each, this article offers valuable insights that can guide investors toward strategies that align with their financial goals while managing exposure to potential losses.

David Prior

David Prior is the editor of Today News, responsible for the overall editorial strategy. He is an NCTJ-qualified journalist with over 20 years’ experience, and is also editor of the award-winning hyperlocal news title Altrincham Today. His LinkedIn profile is here.

Previous Post

What Are The Risks Associated With Commodities Investing?

Next Post

What Are Litecoin Mining Pools?

Related Posts

Senior Citizen in a wheelchair
Finance

How to Support and Manage Your Parents’ Financial Decisions Through Dementia

August 26, 2025
556
Mobile Apps for Managing Finances: What to Choose in 2025
Finance

Mobile Apps for Managing Finances: What to Choose in 2025

August 22, 2025
416
Bank Branch Presence in the UK: Then and Now
Finance

Bank Branch Presence in the UK: Then and Now

August 22, 2025
457
Financial graph illustrating investment performance
Finance

Tradock Explained | What This Trading Platform Offers

August 19, 2025
528
Investment Graph in different device screens
Finance

Quantiumax Reviews: What Makes This Broker the Best Choice Available

August 15, 2025
588
Panoramic view of London's skyline featuring iconic buildings like the Shard and the London Eye against a clear sky
Finance

Can London Still Compete with Silicon Valley and Berlin in Tech Investment?

August 5, 2025
467
Next Post
Crypto investing and Mining

What Are Litecoin Mining Pools?

RECOMMENDED NEWS

Ball Joint Press

Step-by-Step Guide to Installing Ball Joints Using a Ball Joint Press

12 months ago
695
Top-Rated Rubbish Removal Services in London Revealed

Top-Rated Rubbish Removal Services in London Revealed

1 year ago
382
Importance of international project management certifications for the career

Importance of international project management certifications for the career

2 years ago
535
Get to Know One of England’s Oldest Towns: Ipswich

Get to Know One of England’s Oldest Towns: Ipswich

2 years ago
395

BROWSE BY CATEGORIES

  • Business
  • Careers
  • Charity
  • Consumer
  • Culture
  • eCommerce
  • Education
  • Energy
  • Engineering
  • Entertainment
  • Entrepreneurs
  • Environment
  • Fashion
  • Finance
  • Food & Drink
  • Gaming
  • Gardening
  • Health
  • Insurance
  • Interiors
  • Legal
  • Leisure
  • Lifestyle
  • Manufacturing
  • Marketing
  • National
  • News
  • Opinion
  • Pets
  • Politics
  • Property
  • Sales
  • Sport
  • Sports
  • Tech
  • Transport
  • Travel
  • Uncategorized

BROWSE BY TOPICS

Agency AI autosmart banking Beauty business Christmas construction cyber security data digital Digital Marketing Services ecommerce entertainmnet finance fitness Forex health inflation insurance kitchen KYND lifestyle manchester music News north overseas Personal Injury Pharmaceutical Industry property Real Estate recruitment Sir Michael Morpurgo Skincare sports technology tourism travel UK vehicles Warkworth village watch workspace yorkshire

Latest news

BONK saved Solana from becoming ordinary ― Here’s how

August 28, 2025
Bright neon sign reading "Game On," illuminating the surrounding area with vibrant colors.

The Rise of Gamification Across Industries

August 28, 2025
Close-up of a person gripping a smartphone with a mobile game on the screen, highlighting mobile gaming culture.

The Dawn of Mobile Gaming

August 28, 2025
Woman intently gazes at a casino slot machine, contemplating her next move.

Are online casinos safer than the high street? A look at security in 2025

August 28, 2025
Artificial intelligence displayed on a vintage typewriter with the words "Artificial Intelligence"

Artificial intelligence — The New Language of Tomorrow’s Economy, According to Aleksandr Katsuba

August 28, 2025
Ski lift elevated above the ground at a ski resort, with a backdrop of snowy peaks and clear blue skies.

Why ski resorts are the ultimate winter escape

August 28, 2025
Man driving a car at night, focused on the road with one hand on the steering wheel.

Gaining Independence: How Learning to Drive Changes Everyday Life

August 28, 2025
Weather-Resistant Printed Workwear for Outdoor Jobs

Weather-Resistant Printed Workwear for Outdoor Jobs

August 28, 2025
Sleep, Stress and Balance: Why More Britons Turn to Floral Solutions

Sleep, Stress and Balance: Why More Britons Turn to Floral Solutions

August 28, 2025
Comparing Regulatory Overhauls: How the UK’s New Land-Based Casino Reforms Passed into Law

Comparing Regulatory Overhauls: How the UK’s New Land-Based Casino Reforms Passed into Law

August 28, 2025

Today News

  • About
  • Write for us
  • Contact
  • Privacy Policy

@2024 Rooftree Publishing Ltd

Today News in association with Kajino.com

Sign up for our newsletter




  • Business
  • Tech
  • Consumer
  • Finance
  • Environment
  • Property
  • eCommerce

Recent News

BONK saved Solana from becoming ordinary ― Here’s how

August 28, 2025
Bright neon sign reading "Game On," illuminating the surrounding area with vibrant colors.

The Rise of Gamification Across Industries

August 28, 2025
No Result
View All Result
  • Home
  • Business
  • Tech
  • Consumer
  • Finance
  • Environment
  • Property
  • eCommerce
  • Write for us
  • About
  • Contact