Inverse and Leveraged Exchange Traded Funds – Inverse Exchange Traded Funds (ETFs) are designed to trade inversely to an index or benchmark that the fund tracks. These funds are sometimes referred to as “short funds”. Leveraged ETFs seek a return in multiples of an index or benchmark being tracked. ETFs that are both leveraged and inverse – (“ultra-short funds”) – are ones that seek returns in multiples of the inverse of a particular index. Most of these funds “reset” daily, which means that they are designed to reach their objectives in the course of a day. The investments are highly volatile and fraught with risk.

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