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Competitive Advantages
Risks
Competitive Advantages
Direct Inverse Leveraged Exposure: TZA offers 3x inverse daily exposure to the Russell 2000 Index, providing a direct and amplified way to profit from short-term declines in small-cap stocks.
Simplified Bearish Strategy Execution: It allows investors to easily implement a bearish strategy against small-cap stocks without the complexities and potential unlimited risk of traditional short selling or derivative instruments.
Enhanced Profit Potential in Declining Markets: For investors with strong conviction in a short-term small-cap market downturn, TZA offers the potential for significantly magnified returns compared to unleveraged inverse products.
Risks
Compounding Effect Risk: TZA is a leveraged inverse fund designed for daily rebalancing, meaning its performance over periods longer than one day will likely differ significantly from 3x the inverse performance of the underlying index due due to the effects of compounding.
Market Direction Risk: The fund is designed to profit from a decline in the Russell 2000 Index. If the small-cap market rises, TZA will experience losses, amplified by its 3x leverage.
Volatility Amplification Risk: High volatility in the underlying Russell 2000 Index can significantly magnify the negative impact of daily rebalancing and compounding, leading to faster erosion of capital even without a sustained upward trend in the index.
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