Series 7: 6.5.3. Comparing Leveraged And Inverse ETFs And ETNs

Taken from our Series 7 Online Guide

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6.5.3. Comparing Leveraged and Inverse ETFs and ETNs

Familiarize yourself with the following table about traditional and non-traditional ETFs and ETNs.

  Traditional ETFs Leveraged ETFs Inverse ETFs Traditional ETNs Leveraged ETNs Inverse ETNs
Returns Index return Multiple of index (2x) Inverse of index (-x) Index return Multiple of index (2x) Inverse of index (-x)
Tracking Error yes yes yes no yes, if held more than a day yes, if held more than a day
Suitable for buy and hold strategy yes no no yes no no
Suitable for diversified long-term portfolio yes no no yes no no
High expense ratio no yes yes no yes yes
Tax efficient yes no n
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