Introduction

Abstract

This book is about leveraged and inverse exchange-traded funds (hereafter collectively referred to as leveraged exchange-traded funds [LETFs]). Having debuted in 2006 in the United States, they are relatively new members of the exchange-traded fund (ETF) family. An LETF is a publicly traded fund that promises to provide daily returns that are in a multiple (positive or negative) of the returns on an underlying benchmark index. To meet that promise, the fund uses leverage, which is typically obtained through derivatives such as futures contracts, forward contracts, and total-return swaps.