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