##  [# Derivatives-Based ETF Definition](/sections/derivatives-based-etf-definition) 

 

# Derivatives-Based ETF Definition

 

 

Learn the definition of derivatives-based etf and other ETF terminology from the etf.com glossary.



 

 

 

 

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[By ETF Glossary](/authors/etf-glossary)

 Jan 08, 2024

 Edited by: ETF.com Staff

 

 

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## Learn more about Derivatives-Based ETFs

Derivatives-Based ETFs represent a subset of exchange-traded funds that employ financial derivatives, such as futures and options contracts, to achieve their investment objectives. These ETFs may seek to provide leveraged or inverse exposure, manage risk, hedge a particular asset or security, or implement specific investment strategies. The use of derivatives introduces additional complexities and risk factors, requiring investors to comprehend the intricacies of derivative instruments and their potential impact on the fund's performance. Derivatives-Based ETFs appeal to sophisticated investors looking for enhanced strategies beyond traditional passive indexing, emphasizing the importance of comprehensive understanding and careful risk management.

### Related Terms

[Futures](/etf-education-center/etf-glossary/futures), [Leveraged ETF](/etf-education-center/etf-glossary/leveraged-etf), [Inverse ETF](/etf-education-center/etf-glossary/inverse-etf), [Passive Management](/etf-education-center/etf-glossary/passive-management)

 
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 [ ETF Glossary ](/authors/etf-glossary) 

 

 

  ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock…   [View Bio](/authors/etf-glossary)

 



 

 


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