A leveraged exchange-traded fund (ETF) is a security that uses financial derivatives and debt to boost the returns of an underlying benchmark index. While a traditional ETF may track securities of an index on a 1:1 basis, a leveraged ETF may target a higher mark such as 2:1 or 3:1.

Many young or novice investors may have heard about exchange-traded funds (ETFs) or mutual funds and are wondering which is the better option. Typical mutual funds are actively managed rather than passively tracking an index, which can be an advantage. Many mutual funds also may require a minimum investment, but many brokers now offer commission-free ETFs. Generally speaking, ETFs are more tax-efficient and more liquid than mutual funds, which is something young investors should consider.

Exchange traded products are financial instruments that track a benchmark index or a basket of underlying securities and trade on exchanges similar to stocks and bonds. Popular examples include exchange traded notes, exchange traded funds, and other related products.

A stock exchange traded fund is a financial product that tracks a basket of equities, helping investors diversify in a specific industry or group of companies. They provide cost-effective exposure to a selection of stocks that follow a specific index, industry, or equity category.

A bond ETF is a financial product that tracks a basket of bonds, allowing investors to diversify across debt securities. They can mirror bond mutual funds with portfolios ranging from safer U.S. Treasuries to higher-yield bonds of varying maturities and risk levels.

An inverse exchange traded fund uses securities tied to a benchmark index to profit from a decline in the index’s value. Also known as short ETFs or bear ETFs, they involve strategies that bet on market declines. Inverse ETFs usually carry higher fees and can lead to losses if the market direction is miscalculated.

Cryptocurrency ETFs track the price performance of cryptocurrencies by investing in a portfolio linked to them. Like other ETFs, crypto ETFs trade on stock exchanges and can be held in standard brokerage accounts.