Leveraged ETFs allow investors to increase exposure without additional capital outlays. In this video we’ll explore what leveraged ETFs are, how they work, and why you might want to use them.

// TIMESTAMPS:

00:00 - Intro
00:26 - What Is a Leveraged ETF?
01:42 - How Do Leveraged ETFs Work?
04:29 - Conclusion - How To Use Leveraged ETFs
06:07 - Disclosure
06:33 - Disclaimer
07:04 - Outro

// PARTIAL TRANSCRIPT:

A leveraged ETF, as the name suggests, is an ETF (exchange-traded fund) that allows investors to utilize leverage in their portfolio. Leverage simply refers to increasing investment exposure without additional capital outlays. Thus, leveraged ETFs allow you to use leverage without taking on margin, and at degrees greater than what a margin loan would allow.

For example, a 2x leveraged ETF that tracks the S&P 500 seeks to provide 200% of the daily return of the underlying index. That is, if the index increases in value by 5%, the 2x leveraged ETF should increase by 10%. For a 2x leveraged ETF, “2x” and “200%” and “2:1” all refer to the same thing: the leverage ratio. It’s not all upside, though. Similarly, if the index falls by 5%, the leveraged ETF falls by 10%. As such, leveraged ETFs provide the potential for greater returns but also the potential for greater losses.

There are leveraged ETFs of many different leverage ratios available for many different indexes, e.g. 2x the S&P 500, 3x the NASDAQ-100, etc.

Leveraged ETFs utilize debt and swaps to attempt to deliver their stated price movement. This borrowing increases transaction costs and management fees of leveraged ETFs. Their expense ratios are usually considerably higher than those of “normal,” unleveraged ETFs. Still, leveraged ETFs are still usually a cheaper form of applying leverage than margin, a collateralized loan from your investment broker. Leveraged ETFs also allow investors to maintain a constant leverage ratio and to avoid margin calls.

// RESOURCES:

► The Long Term Behaviour of Leveraged ETFs: [ Ссылка ]
► Lifecycle Investing: [ Ссылка ]
► The best leveraged ETFs: [ Ссылка ]
► Leveraged All Weather Portfolio: [ Ссылка ]
► Leveraged Permanent Portfolio: [ Ссылка ]
► Leveraged Golden Butterfly Portfolio: [ Ссылка ]
► Hedgefundie's Excellent Adventure: [ Ссылка ]

Read the blog post here: [ Ссылка ]

#investing #leverage #etfs #leveragedetfs #stocks #stockmarket

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Disclaimer: This is not financial advice, investing advice, or tax advice. The information presented is for informational, educational, and entertainment purposes only. Investment products discussed are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here: [ Ссылка ]

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