On January 30th this year, one of America's most popular silver investment funds lost 60% of its value in a single trading day.
Not 6%. Not even 16%.
Sixty percent.
Gone in one session.
The fund in question was the ProShares Ultra Silver ETF — a multi-billion dollar fund that seeks to double the daily price movement of silver. Silver had a sharp selloff that day, the fund doubled the loss, and thousands of investors watched half their money evaporate before lunch.
This is what happens when Wall Street takes something that was once boring and safe, and turns it into something that is anything but.
The ETF used to be one of the most sensible inventions in investing history.
Buy a single fund, get exposure to hundreds of companies instantly, pay almost nothing in fees.
Vanguard's S&P 500 ETF, for example, charges just 0.03% per year… that's $3 on a $10,000 investment. That was the ETF as it was designed.
What's been launched over the past few years is something else entirely.
Investment firms launched 997 new actively managed ETFs in the U.S. last year alone, nearly triple the average of the five years before.
Among the new arrivals are a fund that gives you 2x leverage on Dogecoin (a meme crypto), and charges you 1.89% per year for the privilege. It's down roughly 70% since it launched in late November.
There's also the Tuttle Capital MSTR 0DTE Covered Call ETF… also down about 70% since October. This piece of trash uses same-day expiring options contracts to chase big dividend payouts on a single volatile stock.
Here's what makes the leverage angle so dangerous, and why I made a whole YouTube video explaining it.
And many people assume that a fund promising 3x the return of an index will simply triple their money over time. It doesn't work like that.
Imagine an index drops 10% one day, then gains 11% the next — you're basically back where you started.
Under the same scenario, a 3x leveraged fund drops 30%, then gains 33%. But 33% of a smaller number gets you to... $93.10 on a $100 starting investment.
The index is flat while the leveraged fund has quietly bled you dry. This is called volatility decay, and it's the silent killer inside every leveraged product.
Plus the longer you hold it, the worse it gets.
Morningstar puts it perfectly… ETF issuers are "firing the spaghetti cannon at the wall in the hopes that a couple of noodles stick."
Because they don't care which products survive. They just want one to go viral, collect fees… and become a moneymaker.
And guess what? Your losses aren't their problem.
The industry's average fee is around 0.2%. Some of these new exotic funds charge 1% to 2% for the opportunity to lose money faster than you would on your own.
If you want exposure to silver, buy silver.
If you want Bitcoin, buy Bitcoin.
If you want large US stocks, buy a simple index fund.
The moment someone adds the word "leveraged," "inverse," "ultra," or "3x" to any investment product, ask yourself who that product is designed to enrich.
Spoiler - it's not you.
I put together a video breaking down exactly how leveraged ETFs destroy long-term wealth… the math is eye-opening, and it takes less than 10 minutes to watch.
Oliver