Leveraged ETF

ETFs Financial Terms Dictionary

Contents

A leveraged exchange-traded fund (ETF) uses derivatives and leverage to increase the return on the underlying index.

While a traditional ETF typically tracks securities in its underlying index at a one-to-one ratio, a leveraged ETF can aim for a ratio of 2:1 or 3:1.
Leverage is a double-edged sword, meaning it can lead to both significant gains and significant losses.