What Is a Leveraged ETF?

In the past few years, exchange-traded funds, or ETFs, have become increasingly popular investment options. These funds grew to prominence because they offer investors significant advantages over traditional mutual funds. One is liquidity; an ETF can be traded all day during normal market hours whereas mutual funds are priced and traded once at the end of the day. Moreover, ETFs frequently carry lower expense ratios than do mutual funds. A specific kind of ETF that has caught on with many investors is the leveraged ETF. Below we offer an investor’s guide to these vehicles.