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

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    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, DFSA, CMA, BaFin, SCB MT4, MT5, cTrader, TradingView, AutoChartist, DupliTrade, Quantower
    Min. Deposit Min. Trade Leverage
    $0 0.01 Lots 1:30 (Retail), 1:500 (Pro)
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    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, SCA, Bappebti xStation
    Min. Deposit Min. Trade Leverage
    $0 0.01 Lots 1:30
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    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, CFDs, Cryptocurrencies FCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB, FINMA, AFM Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, TradingView, eSignal, TradingCentral, ProRealTime, Quantower
    Min. Deposit Min. Trade Leverage
    $0 $100 1:50
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    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, ASIC, CySEC, FSA, FSRA, MFSA, CNMV, AMF eToro Web, CopyTrader, TradingCentral
    Min. Deposit Min. Trade Leverage
    $50 $10 1:30
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    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 FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA, FINMA, CONSOB, AFM, JFSA Web, ProRealTime, L2 Dealer, MT4, TradingView, AutoChartist, TradingCentral, ProRealTime
    Min. Deposit Min. Trade Leverage
    $0 0.01 Lots 1:30 (Retail), 1:222 (Pro)
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    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 ProTrader, MT4, MT5, TradingView, DupliTrade
    Min. Deposit Min. Trade Leverage
    $50 0.01 Lots 1:30
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    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, ASIC, CySEC, DFSA, MAS, FSA, FSCA, FMA, EFSA WebTrader, App
    Min. Deposit Min. Trade Leverage
    $100 Variable 1:30

Safety Comparison

Compare how safe the Understanding Leveraged ETFs are and what features they offer to protect traders.

Safety Comparison
Broker Trust Rating FCA Regulated Negative Balance Protection Guaranteed Stop Loss Segregated Accounts
Pepperstone 4.6
XTB 4.6
Interactive Brokers 4.5
eToro 4.5
IG 4.9
Vantage FX 4.6
Plus500 3.5

Payments Comparison

Compare which popular payment methods the Understanding Leveraged ETFs support and whether they have trading accounts denominated in British Pounds (GBP).

Payments Comparison
Broker GBP Account Debit Card Credit Card Neteller Skrill Apple Pay
Pepperstone
XTB
Interactive Brokers
eToro
IG
Vantage FX
Plus500

Mobile Trading Comparison

How good are the Understanding Leveraged ETFs at mobile trading using apps or other mobile interfaces.

Mobile Trading Comparison
Broker Mobile Apps iOS Rating Android Rating Smart Watch App
Pepperstone iOS & Android 4.4 4.1
XTB iOS & Android 4.7 4.1
Interactive Brokers iOS & Android 4.3 4.5
eToro iOS & Android 4 3.8
IG iOS & Android 4.6 4
Vantage FX iOS & Android 3.6 3.9
Plus500 iOS, Android & Windows 4.1 4.3

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?

Beginners Comparison
Broker Demo Account Minimum Deposit Minimum Trade Support Rating Education Rating
Pepperstone $0 0.01 Lots 4.6 4
XTB $0 0.01 Lots 4.3 3.8
Interactive Brokers $0 $100 3 4.3
eToro $50 $10 2.5 4
IG $0 0.01 Lots 4.5 5
Vantage FX $50 0.01 Lots 4.4 4
Plus500 $100 Variable 4 3

Advanced Trading Comparison

Do the Understanding Leveraged ETFs offer features that allow for more advanced trading strategies?

Advanced Trading Comparison
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 Open API 1:30
Interactive Brokers Capitalise.ai & TWS API 1:50
eToro Automate your trades via CopyTrader - follow profitable traders. Open and close trades automatically when they do. 1:30
IG Expert Advisors (EAs) on MetaTrader, build your own on ProRealTime 1:30 (Retail), 1:222 (Pro)
Vantage FX Myfxbook AutoTrade, Expert Advisors (EAs) on MetaTrader 1:30
Plus500 1:30

Detailed Rating Comparison

Use this heatmap to compare our detailed ratings for all of the Understanding Leveraged ETFs.

Detailed Rating Comparison
Broker Trust Platforms Mobile Assets Fees Accounts Support Research Education
Pepperstone 4.6 4.4 4.3 3.8 4.5 4 4.6 4.3 4
XTB 4.6 4 4.4 4 4.3 4 4.3 4.1 3.8
Interactive Brokers 4.5 3.3 4.4 4.7 4.3 3.5 3 4.4 4.3
eToro 4.5 2.8 3.9 3.8 3.4 4.1 2.5 4.3 4
IG 4.9 4.9 4.3 4.5 3.5 4 4.5 4.9 5
Vantage FX 4.6 4.3 3.8 4.5 4.4 4.5 4.4 4 4
Plus500 3.5 3.1 4.2 3.5 4 4.1 4 2 3

Our Take On Pepperstone

"Pepperstone is a premier trading platform, providing tight spreads, swift execution, and sophisticated charting tools for seasoned traders. Beginners benefit from no minimum deposit, comprehensive learning materials, and outstanding 24/7 support."
Tobias Robinson
Tobias Robinson
Reviewer

Pros

  • Pepperstone presents itself as an economical choice for traders, offering spreads as low as 0.0 in its Razor account. The Active Trader programme provides rebates up to 30% on indices and commodities, plus $3 per lot on forex.
  • Pepperstone offers rapid execution speeds of approximately 30ms, enabling swift order processing and execution, making it ideal for traders.
  • The award-winning customer support can be accessed through phone, email, or live chat. During tests, response times have consistently been under 5 minutes.

Cons

  • Although its market range has improved, its crypto offerings remain limited compared to brokers specialising in this sector, lacking real coin investment options.
  • Pepperstone doesn't offer cTrader Copy, a favoured feature for copying trades found in the cTrader platform, which is available on other platforms such as IC Markets. However, Pepperstone has launched its own user-friendly copy trading app.
  • Pepperstone's demo accounts expire after 30 days, which may not provide sufficient time to explore various platforms and evaluate trading strategies.

Our Take On XTB

"XTB emerges as an ideal option for novice traders, offering the impressive xStation platform, zero commission pricing, no required minimum deposit, and outstanding educational resources, many of which are conveniently integrated into the platform."

Pros

  • 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.
  • Setting up an XTB account is straightforward and fully online, requiring only a few minutes. This simplicity eases new traders into the world of trading.
  • 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

  • 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.
  • 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.
  • The research tools at XTB are commendable but have the potential to excel further. Enhancing them with access to top-tier third-party services like Autochartist, Trading Central, and TipRanks would significantly elevate their offering.

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."

Pros

  • IBKR consistently offers unparalleled access to global equities, with thousands of shares available across over 100 market centres in 24 countries, including the recently added Saudi Stock Exchange.
  • 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.
  • A wide range of third-party research subscriptions, both free and paid, are available for traders. Additionally, by subscribing to Toggle AI, traders can receive commission rebates from IBKR.

Cons

  • 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.
  • You are limited to a single active session per account, meaning you cannot use both your desktop programme and mobile app at the same time. This restriction can occasionally lead to a frustrating experience for traders.
  • Support can be sluggish and frustrating. Tests reveal that you may face challenges reaching customer service quickly, which could result in delays in issue resolution.

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."

Pros

  • In 2025, eToro altered its fee structure by separating crypto trading fees from the spread. A distinct commission is now listed separately, providing traders with increased transparency while maintaining consistent overall costs.
  • eToro secured second place in DayTrading.com's 'Best Crypto Broker' for 2025, offering a vast selection of tokens, dependable service, and competitive fees.
  • The broker offers excellent services for beginners, featuring commission-free stock trading, a low minimum deposit, and an unlimited demo account.

Cons

  • There are no assured stop-loss orders, which could be a valuable risk management tool for novice traders.
  • The only significant contact option, besides the in-platform live chat, is limited.
  • The minimum withdrawal is set at $30, accompanied by a $5 fee. This may impact traders with limited funds, particularly those just starting out.

Our Take On IG

"IG offers a complete package with an intuitive online platform, top-tier beginner education, advanced charting tools through its TradingView integration, real-time data, and swift execution for seasoned traders."

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.
  • The ProRealTime advanced charting platform remains free, provided traders meet modest monthly activity requirements.
  • As a seasoned broker, IG adheres to stringent regulatory standards across various regions, ensuring significant trust.

Cons

  • Beginners may find IG's fees complicated, as they vary depending on the trades or services. This could cause confusion and unexpected costs.
  • In the UK and EU, negative balance protection is available. However, US clients lack account protection and guaranteed stop losses.
  • Based on tests, stock and CFD spreads remain less competitive than the lowest-cost brokers, such as CMC Markets.

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."

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.
  • With a minimal deposit requirement of just $50 and no funding fees, this broker stands out as an excellent option for novice traders.

Cons

  • It's unfortunate that some clients must register with the offshore firm, which provides reduced regulatory safeguards.
  • 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.

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."

Pros

  • 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 offers a dedicated WebTrader platform tailored specifically for CFD trading. It features a user-friendly and streamlined interface.
  • The customer support team consistently delivers reliable support around the clock through email, live chat, and WhatsApp.

Cons

  • Compared to competitors like IG, Plus500 offers limited research and analysis tools.
  • Algorithmic trading and scalping are not available, potentially deterring certain traders.
  • 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.