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Question

Do ETFs offer leveraging?

Answer

There are leveraged and inverse (or short) ETF products available from some providers. ETFs that offer leverage, or that are designed to perform inversely to their underlying index or benchmark, are highly complex financial instruments that carry significant risks. These securities may not be appropriate for many investors, especially for those who plan to hold them longer than one trading session.

Leveraged and inverse ETFs have unique compounding, daily reset and leverage features that may significantly amplify risk, particularly for medium and long-term investors, and in periods of high market volatility. Before investing in any leveraged or inverse ETF, you should read the prospectus carefully. ETFs are traded like shares and may not be for everyone. They closely track the performance of an index and as such their value can go down as well as up and you may get back less than you invested. If you are in any doubt as to their suitability, please seek independent financial advice.

As a potential investor in either ETFs or ETCs we would recommend that you read the prospectus for each product to ensure that you fully understand the product, its structure and the associated risks

If this is the first time you have traded in an ETF you will be asked to complete an Appropriateness Assessment questionnaire before you are able to place your investment instruction.

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