Leveraged funds

About Leveraged ETFsExchange-traded funds (ETFs) are traded on a stock exchange. They allow individual investors to benefit from economies of scale by spreading administration and transaction costs over a large number of investors.

Leveraged funds have been available since at least the early 1990s. The first leveraged ETFs were introduced in the summer of 2006, after being reviewed for almost three years by the Securities And Exchange Commission (SEC). Leveraged ETFs mirror an index fund, but they use borrowed capital in addition to investor equity to provide a higher level of investment exposure. Typically, a leveraged ETF will maintain a $2 exposure to the index for every $1 of investor capital. The fund's goal is to have future appreciation of the investments made with the borrowed capital to exceed the cost of the capital itself.

Investopedia http://www.investopedia.com/articles/exchangetradedfunds/07/leveraged-etf.asp#ixzz3w8V9n3jm 

Betting an index fund will beat bank rates. A well structured index may be a representative sample of some component of the economy.  So, with the proper coefficient, they can be racked faster than  rates respond, and the EFT steal the lender business.  I dubt we have well structured indices, there is too much 'stock market' in  the tandard indices and  not enough 'economy'.  Specialized indices are much better prepared, but then the leveraged gain to scale goes away.

The EFT arbitrages a supposed discontinuity in scale.  But it can be illusory, like n ow when  the four big tech firms make 20% of the market movements. A tech index would do well, but that becomes a small collection, and there is no readon it can be leveraged. So, an index might be OK, but be careful if you leverage the thing.