A growing number of investors from US to South Korea are using leveraged exchange‑traded funds for long‑term investing, a far cry from the day trading they were designed for.

This shift is highlighted by a Quant and a Korean Dentist who have both pushed the limits of these products, showcasing how sophisticated strategies can be applied beyond short‑term speculation.

Leveraged ETFs amplify the performance of an underlying index, which historically appeals to short‑term traders. However, recent market volatility and the search for higher yields have attracted investors looking for long‑term exposure, even though the mechanics of daily rebalancing can erode returns over extended periods.

The move raises questions about risk management and regulatory oversight, as the compounding effects of daily adjustments may degrade performance for long‑term holders.

Bloomberg reports that the combined assets under management of leveraged ETFs have grown from $10 billion in 2015 to over $150 billion in 2024, reflecting the expanding recursive appeal across borders.

While some analysts warn that long‑term holders may face compounding decay, others argue that a disciplined strategy and diversification can mitigate downside.