what is an ultra etf 
an ultra etf is a class of exchange traded fund etf that employs leverage in an effort to amplify the return of a set benchmark since first arriving on the scene in 2006 ultra etfs have grown to include different etfs with underlying benchmarks ranging from broad market indexes such as the s p 500 and russell 2000 to specific sectors such as technology healthcare and basic materials ultra etfs are also known as leveraged etfs or geared funds 1understanding an ultra etfetfs are funds that invest in a basket of securities from the index that they track they generally aim to achieve the same returns as their benchmark by replicating its holdings offering investors the opportunity to mimic the performance of the broader equity market or in other cases gain complete exposure to a specific sector or trend a traditional exchange traded fund usually tracks the securities in its underlying index on a one to one basis meaning that if for example the s p moves 1 percent an s p etf will also move by 1 percent 2 alternative ones often referred to as ultra etfs seek to be more aggressive these marketable securities use financial derivatives and debt to amplify returns offering to double triple or more the long or short performance of a given underlying index 3leveraging is an investing strategy that involves using borrowed funds to buy options and futures to increase the impact of price movements increased daily volatility is both the biggest benefit and greatest danger of ultra etfs they are best suited to short term investing strategies or quick trading to maximize a given bet in the market due to the high risk high cost structure of ultra etfs they are rarely used as long term investments according to the prospectuses for these funds ultra etfs may not achieve double or more the return of the benchmark during flat markets long term returns may also diverge from the desired performance target the ultra etfs only aim is to amplify the daily return a goal they have succeeded in fairly accurately in the short time they can be analyzed 3the total assets of the proshares ultrapro qqq which offers 3x leverage as ofdecember 2023 it is the largest leveraged etf in the u s market according to vettafi 4