Leveraged Exchange Traded Funds (ETFs)


What Does Leveraged & Inverse ETF Mean

An exchange-traded fund (ETF) that utilizes financial derivatives and debt to amplify the returns of an underlying index. Leveraged ETFs are available for most indexes, such as the NASDAQ-100 and the Dow Jones Industrial Average. These funds aim to keep a constant amount of leverage during the investment time frame, such as a 2:1 or 3:1 ratio.

Inverse ETFs are exchange traded funds that are designed to change in price in the opposite direction of a specific index. Inverse funds allow traders to profit in a down market without resorting to the problems and regulations of short selling. Inverse ETF strategies involve watching a selection of indexes for downward trends, then purchasing the appropriate inverse ETF.

Be aware that buying Inverse ETF are short-term strategies and need to be monitored.

Daniel Iuculano, AAMS CMFC

Accredited Asset Management Specialist

Chartered Mutual Fund Counselor