Leveraged and Inverse ETFs Are Gaining Popularity. What to Know Before Jumping in.
If you are a young investor getting your daily dose of finance on social media apps like Tik Tok and Discord, plugs for inverse and leveraged exchange-traded funds or ETFs have bombarded your feed.
The inverse and leveraged ETFs deliver negative and positive multiples of their underlying index’s performance, respectively. And market enthusiasts have been touting these products on social media as a tool to lock in gains amid Federal Reserve rate hikes that led to market declines in 2022.
Know what you’re getting into before you buy one. These volatile ETFs, particularly the ones with leverage, can quickly pile up huge losses in the wrong market.