Index ETFs are supposed to track the major indexes, Dow, S&P500, Nasdaq, Russell. Some of them are doing a good job, others are performing not so well. I use index ETFs all the time, they are less volatile than individual stocks are they are trending nicely most of the time. However, as a buy and hold strategy they may not be a very good idea and here is why.
S&P500 for example is 30% bellow 2007 high. SPY, the index ETF is also 30% down. SSO, which is 2xSPY is down 65%. Here we have a very good correlation.
However, looking at other index ETFs I found huge discrepancies. Nasdaq is probably the worst from this point of view. Compared with 2007 high, Nasdaq is 12% down. However, QQQQ is only 2% bellow 2007 high. QLD, the 2x QQQQ is 45% down!
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