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more ▼WIKI ANALYSIS
WIKI ANALYSISTOP CONTRIBUTORS
Leveraged and inverse exchange-traded funds (ETFs) are designed to achieve a multiple (positive or negative, e.g., 2x or -2x) of an index's return on a daily basis.
Most leveraged and inverse ETFs and mutual funds are designed to provide a target multiple (positive or negative) of index returns for one day (before fees and expenses). The manager of the fund typically holds stocks, index futures, swaps or short positions along with cash-equivalents to achieve this daily fund objective on an ongoing basis. To stay aligned with this one-day target, the fund manager adjusts fund holdings each day based on the closing value of fund assets, reflecting index returns and fund flows for that day. [1]
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