- Most geared funds have one-day investment objectives: They aim to provide, before fees and expenses, a multiple (like 2x or -1x) of the return of a benchmark for a single day. For any period other than one day, the performance of a geared fund will not likely equal the benchmark return times the multiple stated in its one-day objective. This is due to the compounding of daily returns. Compounding affects all investments, and the effects are magnified for geared funds.
- Over periods longer than a day, a geared fund's returns tend to be greater than the multiple of benchmark returns stated in the fund's objective if its benchmark trends upward or downward during the period.
- Over periods longer than a day, a geared fund's returns tend to be less than the multiple of benchmark returns stated in the fund's objective if its benchmark experiences relatively high volatility during the period.
- There are several approaches to holding geared funds for periods longer than a day, each with potential risks and benefits. See Geared Fund Performance guide to learn more.
- Geared funds require active monitoring to ensure they continue to meet your investment objectives.
Learn more about ProShares Geared ETFs.