What the simulator does
The levered ETF performance simulator allows you to see how the performance of holding onto a levered short ETF past 1 day is different from shorting the underlying with leverage for any historical period you select.
The top graph shows the the underlying index of the levered ETF, which for the case of TBT is the Barclay’s 20+ Yr Treasury Index. This is the index for which the levered ETF promises you a multiple of the daily returns. The second graph shows the simulated performance of the Levered ETF (TBT) and the performance of shorting the underlying with 2x leverage yourself. These simulations DO NOT take into account management fees and interest expenses for the ETFs, which can be significant. The metrics above the charts show the % return in the underlying, the % return from the Levered ETF, the % return from shorting the underying with leverage, the % under/out performance of the levered ETF, all for the selected time period.
You can change the selected time period by clicking and dragging a region horizontally on the graph for the underlying. When you do this, the chart of the underlying will zoom in to your selection, while the chart below will recalculate the returns from the holding the levered ETF and from shorting the underlying with leverage. You can pan by holding onto the shift key while clicking and dragging. Clicking on the graph on the underlying twice to zoom out to the original level.
Zoom: click-drag horizontal
Restore zoom level: double-click
Sample scenarios:3.2% underperformance by levered ETF in the past 6 months
10.5% underperformance by levered ETF
7.1% outperformance by levered ETF
To understand what drives the difference in performance of holding a levered ETF past one day and levering the underlying on your own, see our previous posts on TBT: