Leveraged exchange-traded funds (ETFs), like traditional ETFs, are a type of security that tracks indices, industries or asset classes. The difference is that leveraged ETFs use debt and/or derivatives (like options or futures contracts) to amplify the potential returns. In turn, potential losses are also amplified.

Leveraged ETFs are designed to amplify the returns on a daily basis. Due to the effects of compounding, their long term performance can vary significantly from the actual performance of the indices, industries or asset classes the leveraged ETF is tracking. They aren’t suitable for investors who plan to hold them for longer periods, especially in volatile markets.

Leveraged ETFs are a complex trading strategy and can be risky. They’re generally more suited for experienced investors who understand the risks involved.