Understanding Leveraged ETFs
Leveraged Exchange Traded Funds are ETFs that are traded on leverage. Leveraged ETFs aim to increase the degree of returns on the investment into that ETF by the use of borrowed funds from the dealer/broker. So rather than a trader trading 100% with his own funds, he can borrow up to 3 to 10 times his own funds from the broker, to invest into an ETF trade. The trader is required to put up an initial margin to act as collateral for the leveraged trade.
The leveraged ETF aims to track an underlying asset for one day. Another type of leveraged ETF, the inverse ETF aims to achieve a reverse result from tracking an underlying asset’s performance, also for one day. The concept of leveraging means that the returns on the ETF is not at parity with the index being tracked, but is actually in multiples according to the factor of leveraging.
Best Leveraged ETF Brokers
-
When we evaluated Pepperstone's ETF options through MT5 and cTrader, execution speed was exceptional, with spreads typically ranging from 0.0 to 0.3 pips. More than 100 ETF CFDs were available, commission-free on standard accounts. As ASIC and FCA regulate it, the minimal $0 deposit requirement suits smaller ETF trades well.
Instruments Regulator Platforms CFDs, Forex, Currency Indices, Stocks, Indices, Commodities, ETFs, Crypto (only Pro clients), Spread Betting FCA, ASIC, CySEC, BaFin, DFSA, SCA, CMA, SCB Pepperstone Trading Platform, MT4, MT5, cTrader, TradingView, AutoChartist Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:30 (Retail), 1:500 (Pro) -
When reviewing XTB's ETF offering on xStation 5, we explored over 300 ETFs in sectors such as technology, energy, real estate, and emerging markets. The platform boasts commission-free trading up to €100,000 monthly, with competitive spreads starting at 0.08%. Regulated by FCA and KNF with no minimum deposit, it suits cost-conscious traders perfectly.
Instruments Regulator Platforms CFDs on shares, Indices, ETFs, Raw Materials, Forex currencies, cryptocurrencies, Real shares, Real ETFs FCA, CySEC, KNF, DFSA, FSC xStation Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:30 -
In our tests, we utilised IBKR’s professional platforms to trade thousands of ETFs across key sectors like AI, utilities, and ESG. U.S. clients benefit from zero commission, whereas others are charged minimal fees starting at $0.005 per share. Globally regulated and offering no minimum deposit on IBKR Lite, it’s nearly unrivalled for serious traders dealing in high volumes of ETFs.
Instruments Regulator Platforms Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, Cryptocurrencies, CFDs SEC, FINRA, CFTC, NFA, CIRO, FCA, CBI, ASIC, SFC, SEBI, JFSA, MAS Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, TradingView, eSignal, TradingCentral, ProRealTime, Quantower Min. Deposit Min. Trade Leverage $0 $100 1:30 -
In our recent evaluations, IG provided 6,000+ ETFs spanning global sectors like biotech, renewables, finance, and commodities, surpassing nearly all competitors. Its advanced platform offers ETF CFD trading with spreads starting at 0.04%, and DMA is accessible for professionals. IG, highly regulated and requiring a low minimum, is ideal for serious ETF traders seeking depth, speed, and robust tools.
Instruments Regulator Platforms CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting CFTC, NFA, FCA, BaFin, ASIC, FINMA, MAS, JFSA, FMA, DFSA, BMA Web, L2 Dealer, MT4, TradingView, AutoChartist, TradingCentral, ProRealTime Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:30 (Retail), 1:222 (Pro) -
We tested ETF trading on eToro and discovered over 300 options in tech, energy, healthcare, and ESG. The zero-commission model was notable, with spreads around 0.09%. Regulated by FCA and CySEC, the platform's $10 minimum deposit and social trading tools simplify and enhance ETF investment accessibility.
Instruments Regulator Platforms CFDs, Forex, Stocks, Indices, ETFs, Smart Portfolios, Commodities, Futures, Crypto, NFTs FCA, CySEC, MiCA, MFSA, FSRA, ASIC, FSAS, MAS, GFSC eToro Web, CopyTrader, TradingCentral Min. Deposit Min. Trade Leverage $50 $10 1:30 -
In our practical tests, Vantage provided CFD access to around 55 global ETFs, spanning equity indices, commodities, bonds, real estate, and energy. Raw ECN accounts feature spreads from 0.0 pips, with commissions of USD 3.00 per lot (Pro accounts enjoy even lower commissions at USD 1.50 per lot).
Instruments Regulator Platforms CFDs, Forex, Stocks, Indices, Commodities, ETFs, Bonds, Spread betting FCA, ASIC, FSCA, VFSC, CIMA ProTrader, MT4, MT5, TradingView, DupliTrade Min. Deposit Min. Trade Leverage $50 0.01 Lots 1:30 -
In our comprehensive analysis, Plus500 provided ETF CFD access to international markets with leverage up to 1:5 in sectors such as equity indices, commodities, bonds, and energy. There are no commissions, but spreads vary (e.g., ETF spreads around 0.02%) and include overnight swaps and currency conversion fees up to 0.7%. It's suitable for casual leveraged ETF CFD traders.
Instruments Regulator Platforms CFDs on Forex, Stocks, Indices, Commodities, ETFs, Options FCA, CySEC, EFSA, ASIC, FMA, FSCA, MAS, ISA, FSA, DFSA, SCA, JFSA, SCB, CIRO, BAPPEBTI, OJK, BI WebTrader, App Min. Deposit Min. Trade Leverage $100 Variable Yes
Pepperstone
XTB
Interactive Brokers
IG
eToro
Vantage FX
Plus500Safety Comparison
Compare how safe the Understanding Leveraged ETFs are and what features they offer to protect traders.
| Broker | Trust Rating | FCA Regulated | Negative Balance Protection | Guaranteed Stop Loss | Segregated Accounts |
|---|---|---|---|---|---|
| Pepperstone | ✔ | ✔ | ✘ | ✔ | |
| XTB | ✔ | ✔ | ✔ | ✔ | |
| Interactive Brokers | ✔ | ✔ | ✘ | ✔ | |
| IG | ✔ | ✔ | ✔ | ✔ | |
| eToro | ✔ | ✔ | ✘ | ✔ | |
| Vantage FX | ✔ | ✔ | ✘ | ✔ | |
| Plus500 | ✔ | ✔ | ✔ | ✔ |
Payments Comparison
Compare which popular payment methods the Understanding Leveraged ETFs support and whether they have trading accounts denominated in British Pounds (GBP).
| Broker | GBP Account | Debit Card | Credit Card | Neteller | Skrill | Apple Pay |
|---|---|---|---|---|---|---|
| Pepperstone | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ |
| XTB | ✔ | ✔ | ✔ | ✔ | ✔ | ✘ |
| Interactive Brokers | ✔ | ✘ | ✘ | ✘ | ✘ | ✘ |
| IG | ✔ | ✔ | ✔ | ✘ | ✘ | ✘ |
| eToro | ✔ | ✔ | ✘ | ✔ | ✔ | ✘ |
| Vantage FX | ✔ | ✔ | ✔ | ✔ | ✔ | ✘ |
| Plus500 | ✔ | ✔ | ✔ | ✘ | ✔ | ✔ |
Mobile Trading Comparison
How good are the Understanding Leveraged ETFs at mobile trading using apps or other mobile interfaces.
| Broker | Mobile Apps | iOS Rating | Android Rating | Smart Watch App |
|---|---|---|---|---|
| Pepperstone | iOS & Android | ✘ | ||
| XTB | iOS & Android | ✔ | ||
| Interactive Brokers | iOS & Android | ✔ | ||
| IG | iOS & Android | ✔ | ||
| eToro | iOS & Android | ✘ | ||
| Vantage FX | iOS & Android | ✘ | ||
| Plus500 | iOS, Android & Windows | ✘ |
Beginners Comparison
Are the Understanding Leveraged ETFs good for beginner traders, that might want an affordable setup to get started, along with good support and educational resources?
| Broker | Demo Account | Minimum Deposit | Minimum Trade | Support Rating | Education Rating |
|---|---|---|---|---|---|
| Pepperstone | ✔ | $0 | 0.01 Lots | ||
| XTB | ✔ | $0 | 0.01 Lots | ||
| Interactive Brokers | ✔ | $0 | $100 | ||
| IG | ✔ | $0 | 0.01 Lots | ||
| eToro | ✔ | $50 | $10 | ||
| Vantage FX | ✔ | $50 | 0.01 Lots | ||
| Plus500 | ✔ | $100 | Variable |
Advanced Trading Comparison
Do the Understanding Leveraged ETFs offer features that allow for more advanced trading strategies?
| Broker | Automated Trading | Pro Account | Leverage | VPS | AI | Low Latency | Extended Hours |
|---|---|---|---|---|---|---|---|
| Pepperstone | Expert Advisors (EAs) on MetaTrader | ✔ | 1:30 (Retail), 1:500 (Pro) | ✔ | ✘ | ✔ | ✘ |
| XTB | - | ✔ | 1:30 | ✘ | ✘ | ✔ | ✘ |
| Interactive Brokers | Capitalise.ai, TWS API | ✘ | 1:30 | ✘ | ✔ | ✔ | ✔ |
| IG | Expert Advisors (EAs) on MetaTrader, build your own on ProRealTime | ✔ | 1:30 (Retail), 1:222 (Pro) | ✔ | ✔ | ✔ | ✔ |
| eToro | Automate your trades via CopyTrader - follow profitable traders. Open and close trades automatically when they do. | ✘ | 1:30 | ✘ | ✔ | ✘ | ✔ |
| Vantage FX | Myfxbook AutoTrade, Expert Advisors (EAs) on MetaTrader | ✘ | 1:30 | ✔ | ✘ | ✘ | ✘ |
| Plus500 | ✘ | ✘ | ✔ | ✘ | ✔ | ✘ | ✘ |
Detailed Rating Comparison
Use this heatmap to compare our detailed ratings for all of the Understanding Leveraged ETFs.
| Broker | Trust | Platforms | Mobile | Assets | Fees | Accounts | Support | Research | Education |
|---|---|---|---|---|---|---|---|---|---|
| Pepperstone | |||||||||
| XTB | |||||||||
| Interactive Brokers | |||||||||
| IG | |||||||||
| eToro | |||||||||
| Vantage FX | |||||||||
| Plus500 |
Our Take On Pepperstone
"Pepperstone excels in trading with tight spreads, swift execution, and advanced charting for seasoned traders. Beginners enjoy zero minimum deposit, comprehensive educational materials, and outstanding 24/5 support, including 18-hour weekend assistance."Tobias Robinson
Reviewer
Pros
- In recent years, Pepperstone has significantly enhanced the deposit and withdrawal process. By 2025, clients can use Apple Pay and Google Pay, while 2024 saw the introduction of PIX and SPEI for customers in Brazil and Mexico.
- Support for top-tier charting platforms such as MT4, MT5, TradingView, and cTrader. These tools accommodate different short-term trading methods, including algorithmic trading.
- Provides a specialised CopyTrading app for traders preferring a passive investment strategy.
Cons
- Although the market range has improved, crypto options remain limited compared to brokers specialising in this field, like Eightcap, and investors cannot purchase actual coins.
- Execution might not appear as dependable in rapid markets as headline speeds imply. Our tests showed swift execution at targeted prices. However, community feedback highlights concerns over slippage, stop-loss fills, and order triggers sensitive to spreads amid volatility.
- Provides limited internal market analysis and collaborates with third-party firms like Autochartist to address this. This issue is minor, given the abundance of other sources offering comprehensive market insights.
Our Take On XTB
"XTB excels for novice traders with its superb xStation platform, minimal trading costs, no required deposit, and outstanding educational resources, many of which are fully integrated into the platform."William Berg
Reviewer
Pros
- XTB has raised interest rates on uninvested funds and introduced zero-fee ISAs (for ETFs and real shares, or 0.2% on trades over €100k) for UK clients, offering access to a wide array of markets.
- XTB offers a superb array of educational resources, such as training videos and articles, embedded within the platform to assist traders of all experience levels.
- The xStation platform stands out with its user-friendly design and intuitive tools, such as adaptable news feeds, sentiment heatmaps, and a trader calculator. These features streamline the learning process for new traders.
Cons
- The demo account lasts only four weeks, posing a challenge for traders wanting to fully explore the xStation platform and refine short-term strategies before investing actual money.
- XTB has stopped supporting MT4, restricting traders to its own platform, xStation. This decision may discourage experienced traders accustomed to using the MetaTrader suite.
- XTB lacks a raw spread account, a feature increasingly offered by competitors such as Pepperstone. This omission might not satisfy traders seeking the most competitive spreads.
Our Take On Interactive Brokers
"Interactive Brokers ranks highly for seasoned traders due to its robust charting platforms, live data, and bespoke layouts via the new IBKR Desktop app. Its competitive pricing and sophisticated order choices appeal to traders, and its wide equity options are industry-leading."Tobias Robinson
Reviewer
Pros
- The TWS platform is tailored for intermediate and advanced traders, featuring over 100 order types and a dependable real-time market data feed with exceptional uptime.
- The new IBKR Desktop platform combines the top features of TWS with customised tools such as Option Lattice and MultiSort Screeners, providing an impressive trading experience for traders of all skill levels.
- Interactive Brokers has introduced ForecastTrader, a distinctive zero-commission offering. Users trade yes/no Forecast Contracts on political, economic, and climate events with fixed $1 payouts per contract. Benefit from 24/6 market access and earn up to 3.14% APY on held positions.
Cons
- In 2025, IBKR was fined $11.8m by the US OFAC for operating in sanctioned areas. That same year, FINRA imposed a $125k fine for lapses in municipal bond disclosure.
- The learning curve for TWS is quite steep, making it tough for novice traders to navigate and grasp all its features. In contrast, Plus500's web platform is far more accessible for those new to trading.
- IBKR offers a variety of research tools, but their inconsistent placement across trading platforms and the 'Account Management' webpage creates a confusing experience for users.
Our Take On IG
"IG offers a complete package: an easy-to-use web platform, top-tier beginner education, enhanced charting via TradingView, up-to-date data, and strong trade execution for seasoned traders."Tobias Robinson
Reviewer
Pros
- The web-based platform supports traders at every level, offering advanced charting tools and real-time market data vital for trading. Additionally, IG now includes TradingView integration.
- As a seasoned broker, IG adheres to stringent regulatory standards across various regions, ensuring significant trust.
- The IG app provides an excellent mobile trading experience with an intuitive design, earning it the Runner Up position in our 'Best Trading App' award.
Cons
- IG has ended its swap-free account, diminishing its attractiveness to Islamic traders.
- Based on tests, stock and CFD spreads remain less competitive than the lowest-cost brokers, such as CMC Markets.
- Beginners may find IG's fees complicated, as they vary depending on the trades or services. This could cause confusion and unexpected costs.
Our Take On eToro
"eToro's social trading platform excels with its outstanding user experience and lively community chat, aiding beginners in spotting opportunities. It offers competitive fees on numerous CFDs and real stocks, alongside exceptional rewards for seasoned strategists."Tobias Robinson
Reviewer
Pros
- eToro has launched automated crypto staking, offering a pathway to passive income. However, Ethereum requires users to opt in.
- Utilising TradingView, the charts provide robust tools for technical analysis, featuring nine chart types and more than 100 indicators.
- The entry requirements for eToro Club have been reduced. For $4.99 monthly, members enjoy 18 benefits, including a debit card that converts purchases into stocks with a 4% share return.
Cons
- The only significant contact option, besides the in-platform live chat, is limited.
- The absence of extra charting platforms such as MT4 may deter experienced traders who rely on external software.
- There are no assured stop-loss orders, which could be a valuable risk management tool for novice traders.
Our Take On Vantage FX
"Vantage is an ideal choice for CFD traders looking for a well-regulated broker with access to the dependable MetaTrader platforms. With a swift sign-up process and a minimum deposit of $50, starting trading is simple and fast."Tobias Robinson
Reviewer
Pros
- Vantage has enhanced its trading tools for experienced traders, introducing AutoFibo EA to pinpoint potential market reversals.
- The broker recently expanded its range of CFDs, offering more trading opportunities.
- Vantage upholds a high trust score through its solid reputation, backed by premier regulation from the FCA and ASIC.
Cons
- Regrettably, cryptocurrencies are accessible solely to clients in Australia.
- To access optimal trading conditions, a substantial deposit of $10,000 is required. This includes a commission of $1.50 per transaction per side.
- Based on tests, average execution speeds of 100ms to 250ms are slower compared to other options.
Our Take On Plus500
"Plus500 provides a seamless experience for traders with its CFD platform, featuring a sleek design and interactive charting. However, its research tools are basic, fees are higher than the most economical brokers, and its educational resources could be improved."Tobias Robinson
Reviewer
Pros
- Plus500 offers a dedicated WebTrader platform tailored specifically for CFD trading. It features a user-friendly and streamlined interface.
- In 2025, Plus500 expanded its range of share CFDs to include emerging sectors such as quantum computing and AI. This update opened up trading opportunities in stocks like IonQ, Rigetti, Duolingo, and Carvana.
- Plus500 has expanded its range of short-term trading instruments by adding VIX options, which feature increased volatility. Additionally, it has extended trading hours for seven stock CFDs.
Cons
- Plus500's omission of MetaTrader and cTrader charting tools may deter seasoned traders seeking familiar platforms.
- Compared to competitors like IG, Plus500 offers limited research and analysis tools.
- Educational resources are not as extensive as leading brokers such as eToro, which affects beginners' ability to learn quickly.
How Leveraged ETFs Work
Leveraged ETFs hold more than $30 billion in assets and are programmed to work by daily compounding. The daily schedule of this ETF means that it is an extremely speculative and risky form of ETF investment which is best left for the institutional investors who have plenty of cash to spare. They can also be used as temporary hedge trading instruments.
Leveraged ETFs are by their nature, leveraged instruments. This means they expose the trader to the performance of the index being tracked by a leverage factor. If for instance, an investor is in a leveraged ETF that seeks to triple the returns on an index, a $100 investment will actually give the trader a $300 exposure to the market.
Leveraged ETFs can be traded with long and short positions. The instruments traded with leveraged ETFs are basically options, futures contracts and swap deals. Swap deals require the trader borrowing an asset from a dealer, and trying to profit from a bullish move of the borrowed asset (long swaps), or try to profit from a bearish movement in the swap asset (short swaps).
Leverage is a double-edged sword. While it can magnify profits and make the trader some good money that is way above what he or she would ordinarily have made, it can also be an account killer if used carelessly. When trading a basket of assets which may behave differently individually, it is essential that the trader knows how to trade leveraged ETFs, and the rules of leveraging will definitely have to apply here.
If for instance a particular index being tracked by an inverse leveraged ETF rises by 5% for a day, and the factor of leveraging is X3, the inverse ETF itself will fall by a factor of 15%. So what this means is that if the investor took a long position on the inverse ETF and the index being tracked by that ETF falls by a factor of 8%, the investor will lose 16% on that position using a leveraging factor of X2. This is why leveraging is described as a double-edged sword.
If a trader goes long on a leveraged ETF which offers a X2 leverage, the trader is aiming to make $2 for every $1 invested in the market. So for every increase by a factor of $1 in the closing price of the asset, the dealer pays the trader $2. In an inverse leveraged ETF investment, the dealer pays the trader $2 for every $1 that the asset has dropped in value.
If the trader is short on the leveraged ETF which has a X3 leverage factor, he receives $3 for every $1 that the asset has lost value by the end of the day. In these cases, the trader has benefited from the leveraging that the ETF offers.
However, if the trade suffers a $1 decrease in the closing value of the asset for a long swap, or if the closing value of the asset increased by $1 for a short swap, then the fund will have to pay the counterparty $2 (i.e. double the closing value), and will also have to forgo the cash collateral initially put up to borrow the asset. This is what makes leveraged ETFs particularly risky to trade.
In order for traders to make money from leveraged ETFs, it is essential that the ETF is not held longer than one day, because the returns on investment are calculated on a daily return rate and not on the basis of annual returns. So holding the ETF for more than a day subjects it to intraday vagaries in the market.