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Inverse & Leveraged ETFs

At Stake, we believe you should decide what to invest in or trade. This means having the ability to take opportunities no matter the market conditions. In the US market, there is a large range of inverse ETFs that allow you to bet against the direction of a market (if you think it's going to fall) and generate returns from that. 

There is also a range of ETFs that have leverage built into them. We make these available for you to trade, but before investing in them, you should understand how they work.

What is a leveraged ETF?

This is an exchange-traded fund (ETF) that uses financial derivatives and debt to boost the returns of the underlying benchmark. Leveraged ETFs usually provide multiple times the daily performance of the index they track. For example, a 2x leveraged ETF tracking the S&P 500 will aim to deliver twice the daily return of the index. Leverage can also be applied to inverse ETFs.

What is an inverse ETF?

Inverse ETFs aim to profit from a decline in the value of its underlying benchmark. Also known as "short" or "bear" products, they use financial instruments to deliver opposite returns of the index the ETF tracks. An S&P 500 inverse ETF intends to deliver a 1% positive return if the market fell by 1% during one day. Investors often buy inverse ETFs as a hedging tool or a short-term trading strategy to protect against a potential market downturn.

Please read before investing in these instruments

Inverse (short) and leveraged ETF funds are complicated instruments and are generally only suitable for experienced investors and traders, who monitor their trading regularly and understand the nature of the product. 

On Stake, before trading these types of instruments, we suggest that you make yourself aware of the risks involved with them. We'll also seek your confirmation that you understand these risks before you place a trade in one. 

As these products are designed to meet their stated objectives on a daily basis, they may not be suitable for long term investments.

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