Leveraged inverse ETFs use the same concept as leveraged products and aim to deliver a magnified return when the market is falling. For example, if the S&P has declined by 2%, a 2X-leveraged inverse ETF will deliver a 4% return to the investor excluding fees and commissions.

What is leveraged and inverse leveraged?

Meanwhile, a leveraged ETP generally seeks to deliver multiples of the performance of an index over a given time period. ... A leveraged inverse ETP, meanwhile, seeks to deliver a multiple of the opposite of a given index's performance over some time period.

How long should you hold inverse ETFs?

Investors who wish to hold inverse ETFs for periods exceeding one day must actively manage and rebalance their positions to mitigate compounding risk.