I think that if you go to the websites of the ETF fund families you will see that they warn investors of the very same thing…..especially the prospectuses of the various leveraged and inverse ETFs. The following is a warning from the Direxion webpage Overview for the small-cap leveraged ETFs.
These leveraged ETFs seek a return that is +300% or -300% of the return of their benchmark index for a single day. The funds should not be expected to provide three times or negative three times the return of the benchmark’s cumulative return for periods greater than a day.
So you can see that once you hold a leveraged ETF beyond one day you can and will get the same tracking error mentioned in this articles examples.
On the other hand, if an AIM investor is using leveraged ETFs for the Volatility Capture portion of the AIM money management system then the volatile nature of these ETFs can work to their advantage compared to unleveraged ETFs. After a discussion about them here a few months ago I used a couple in LD-AIM programs. I began each program with only 2 sells and was pleased with the results. Sold out fairly quickly and went on to something else. Personally, I would not use them in a regular AIM program which is very similar to Buy-and-Hold because of the warnings mentioned in your article and warnings posted by the sellers of these leveraged ETFs.
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