Series 7: 6.5.3. Comparing Leveraged And Inverse ETFs And ETNs

Taken from our Series 7 Online Guide

6.5.3. Comparing Leveraged and Inverse ETFs and ETNs

Familiarize yourself with the following table about traditional and non-traditional ETFs and ETNs.

	Traditional ETFs	Leveraged ETFs	Inverse ETFs	Traditional ETNs	Leveraged ETNs	Inverse ETNs
Returns	Index return	Multiple of index (2x)	Inverse of index (-x)	Index return	Multiple of index (2x)	Inverse of index (-x)
Tracking Error	yes	yes	yes	no	yes, if held more than a day	yes, if held more than a day
Suitable for buy and hold strategy	yes	no	no	yes	no	no
Suitable for diversified long-term portfolio	yes	no	no	yes	no	no
High expense ratio	no	yes	yes	no	yes	yes
Tax efficient	yes	no	n

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