Capturing the Leveraged/Inverse ETF Deception Premium?

Does asymmetry in the design/performances of leveraged and inverse exchange-traded products create a reliable edge? In his July 2025 paper entitled “Deception by Design: Leveraged ETFs, Structural Fraud, and Proof of Outperformance”, Rob Bezdjian analyzes the general construction and performance of leveraged and inverse exchange-traded funds (ETF). He then devises and tests a (“Handsome Rob”) strategy that shorts related pairs of leveraged:inverse ETFs at a 1:1.5 ratio, rebalanced quarterly, with a top-up rule that amplifies exposure only after price declines. Using mathematical models and historical data for six pairs of leveraged and inverse ETFs from the first quarter of 2016 through the second quarter of 2025, he finds that: (more…)