What is a leveraged ETF?

Leveraged ETFs seek to magnify the returns of an underlying index for a single day. They can track any asset, such as stocks, various market sectors, bonds or futures contracts. The level of magnification is included in the fund’s description but they are generally 2x or 3×. They can be upwardly leveraged or inversed.

Which ETFs are the best in the leveraged space?

While these products might not necessarily be the best choices in their respective markets, they have become popular vehicles in this sector. Here’s a quick guide: ProShares UltraPro QQQ is the most popular and liquid ETF in the leveraged space, with AUM of $21.9 billion and an average daily volume of 67.3 million shares a day.

Should you invest in a leveraged ETF?

Investing strategies that employ leverage can be complicated, making leveraged ETFs a better option for many investors. This class of exchange-traded funds aims to provide investors with a return of a specific multiple to an underlying asset class or benchmark. Take the S&P 500, for example.