What is a futures ETF?

Exchange-traded funds can use futures as the assets that make up the fund. Futures ETFs give investors access to the futures market without having to trade on the futures markets. A futures contract is an agreement between a buyer and a seller based on an underlying asset.

What is an ETF & how does it work?

An ETF (a company) will purchase futures contracts and then offer a securitized version to investors. The ETF doesn't take possession of the underlying asset but continues to trade contracts to keep the futures ETF running. The fund will purchase contracts so that it mirrors the index that it is designed to track.

What is futures trading and how does it work?

Futures trading requires lower margins and thus less capital in your trading account. The amount you “save” can be set aside for long-term appreciation, for example in ETFs or mutual funds. With ETFs, you are binding capital that could (perhaps) be of better use elsewhere.

What are the differences between US and EU ETFs?

US ETFs are for the most part far more liquid than EU ETFs. This means the only options you have, if you are based in the EU, are to change your status to “professional” or trade US futures. For example, if the average gain per trade is 0.5% in SPY or QQQ, this equals 22 points in S&P 500 futures (ES) and 74 points in Nasdaq (NQ).