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Introduction to Handle with Caution: Leveraged Exchange-Traded Funds

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Leveraged exchange-traded funds use derivatives to exploit their indexes, adding a whole new level of complexity.

What you will learn

  • Leveraged Exchange-Traded Funds: An Overview
  • Leveraged Exchange-Traded Funds: Suitability

What do you know?

Introduction to Handle with Caution: Leveraged Exchange-Traded Funds

One of the most heavily traded segments of the exchange-traded fund industry are leveraged and inverse ETFs. These funds gain leverage through the use of derivatives to get additional exposure to their index (for example, twice the return of the S&P 500), short a segment of the market, or both. While leveraged and inverse ETFs may seem like exciting investment tools, it is important to understand how these ETFs work before you jump in.