Types of ETFs (Part 2)

Leverage ETFs

Leverage ETF allow investors to boost their return 2 or 3 times higher. For example, should S&P 500 index goes up 1 percent, leverage ETF would provide a gain of 2 or 3 percent. However, the losses will be magnified should the index fall. A 1 percent loss of the index will convert to 2 or 3 percent loss with leverage ETFs.

How the underlying performance of leverage ETFs can be achieved by the fund manager is by using derivative instruments such as future contracts, equity swaps and etc.

Below are some of the Leverage ETFs:

Ticker Symbol Market Type
UDOW Dow 30 Index (3x)
SSO S&P 500 Index (2x)
XPP FTSE China 25 Index (2x)
UPV MSCI Europe Index (2x)
DXD Short Dow 30 Index (-2x)
SPXU Short S&P 500 Index (-3x)
EWV Short MSCI Japan (-2x)
EEV Short MSCI Emerging Markets Index (-2x)
URTY Russell 2000 Index (3x)

For information can be found from http://www.proshares.com/

Currency ETFs

Currency ETFs are available as an alternative channel for exposure to foreign currency investment. For example, Exchange rate for Australian Dollar (AUD) to US Dollar (USD):

1 AUD = 1.0210 USD

Ticker Symbol for Currency ETF → FXA

Price of FXA → 102.10

Should AUD gets stronger and USD gets weaker, prices of FXA will go up, and investor will make capital profit.

Below are some of the Currency ETFs:

Ticker Symbol Currency ETF
FXA Australian Dollar Trust
FXB British Pound Sterling Trust
FXC Canadian Dollar Trust
FXCH Chinese Renminbi Trust
FXE Euro Trust
FXY Japanese Yen Trust
FXM Mexican Peso Trust
FXRU Russian Ruble Trust
FXS Swedish Krona Trust
FXF Swiss Franc Trust

For information can be found from http://www.currencyshares.com/

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