RT Journal Article SR Electronic T1 Inverse and Leveraged ETFs: Not Your Father’s ETF JF The Journal of Index Investing FD Institutional Investor Journals SP 83 OP 89 DO 10.3905/jii.2010.1.1.083 VO 1 IS 1 A1 Patricia Knain Little YR 2010 UL https://pm-research.com/content/1/1/83.abstract AB First-generation ETFs were designed as convenient, straightforward investment vehicles for earning the returns of broad market indexes. The rapid growth and competitiveness of the ETF industry has led to the development of products that bear more complicated relationships with market indexes. The first wave of these, leveraged and inverse ETFs, were engineered to meet objectives quite different from those of the traditional ETFs. This article shows how investors who used them like traditional ETFs experienced unintended consequences during the volatile markets of 2008–2009. The author explains how the daily rebalancing of leverage affects the valuation and determines the appropriate usage of such ETFs.TOPICS: Exchange-traded funds and applications, passive strategies, portfolio theory