Leveraged/Inverse ETFs

Leveraged ETFs offer enhanced returns of a given index over a short period of time. For example, a 2x S&P 500 ETF is designed to deliver twice the daily return of the S&P 500 Index. Most often, the amount of leverage is reset daily, making these vehicles ideal for daily or very-short-term holding periods due to the compounding nature of their returns. They are not long-term, buy-and-hold instruments, but tactical tools for short time horizons. Inverse ETFs work similarly, but they offer the inverse performance of an index.