Leveraged, Leverage ratio, Leverage

Leveraged

ETFs include a range of funds, each employing different strategies to manage the impact of price movements in underlying assets or indices.

Leveraged ETFs use financial leverage to amplify the effects of price changes in underlying assets or indices. For example, a 2x leveraged ETF aims to double the return of the base index. This amplification affects both gains and losses, increasing volatility.

Non-leveraged ETFs are traditional ETFs that do not use financial leverage. They mirror the performance of their underlying indices or assets without any multiplier, offering direct investment.

Inverse ETFs are designed to achieve returns opposite to the trends of the underlying indices or assets. If the base index decreases in value, the value of the 'Inverse' ETF increases, and vice versa. These funds are typically used for hedging purposes.

Leverage Ratio

The "leverage ratio" indicates the extent of leverage utilized by an ETF, if any. This measure can be expressed as a multiple (e.g., 3x, 2x, 1.5x, 1.25x, or other) or variable, indicating that the leverage ratio can adjust over time. 

Leverage

Leverage reflects the strategy and magnitude of leverage employed by an ETF. This concept encapsulates whether an ETF uses leverage (as specified by Leveraged) and to what degree (as specified by the Leverage ratio).