Many investors believe their portfolio is diversified because they have exposure to a variety of asset classes. However, because stocks and bonds sometimes move in the same direction, a traditional asset mix of stocks and bonds may not provide the level of diversification investors might expect.
Fortunately, new investment vehicles exist that allow investors to build more sophisticated and better diversified portfolios.
Understanding Leverage and Inverse
Leveraged investment products allow you to magnify your exposure to a desired index. In addition, they enable you to maintain your current investment exposure while freeing up cash to invest in noncorrelated assets.
Inverse investment products move in the opposite direction of the market. They give you the ability to hedge a portfolio or potentially profit in a down market, as well as help manage risk and volatility when used as part of a well-diversified portfolio.
Investors can access leveraged and inverse strategies via mutual funds and exchange-traded funds (ETFs).
This piece is intended to be for information purposes only. Investors should discuss these concepts and their personal financial situation with their financial advisor or advisors prior to making any investment decisions.
Inverse funds and leveraged funds may not be suitable for all investors. Investing in short/inverse funds involves certain risks, which may include increased volatility due to the funds' possible use of short sales of securities and derivatives such as options and futures. The funds are subject to active trading risks that may increase volatility and impact the funds' ability to achieve their investment objectives. The use of leverage by a mutual fund increases the risk to the fund. The more a mutual fund invests in leveraged instruments, the more the leverage will magnify any gains or losses on those investments.
For more complete information regarding Rydex funds, call 800.820.0888 or click here for a prospectus. Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. The fund's prospectus contains this and other information about the fund. Read the prospectus carefully before you invest or send money.
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