Leveraged and Inverse ETFs are new in Bursa Malaysia. Find out about the gains and risks for leveraged and inverse exchange traded funds. Will you consider trading these ETFs?

Introduction to Exchange Traded Funds (ETFs)

  • Portfolio of stocks / bonds / commodities
  • Authorized Participant (AP) or Market Maker creates and redeem ETF units
  • Management fee for ETF charged
  • Intra-day trading available (within same day)
  • T + 2 settlement (settlement within 2 days of transaction execution)
  • Trade through brokerage account
  • More info on ETFs

 

Leverage and Inverse ETFs

Leverage and Inverse ETFs are trading instruments. It is best used in trending markets with the average holding period of 5 days. The trader needs to be an active nimble trader with a short-term view of the market.

What is Leveraged ETF?

  • Aims to deliver twice (2X) the daily performance of an Index.
  • Max 30% of fund’s NAV set aside as as margin for investments in futures contracts.
  • Max 10% of fund’s NAV invested in debentures with a remaining tenure above 365 days.

Comparable to

  • Call warrants
  • Margin financing
  • Futures

What is Inverse ETF?

  • Aims to deliver inverse (-1X) the daily performance of an Index.
  • Max 15% of fund’s NAV set aside as as margin for investments in futures contracts.
  • Max 10% of fund’s NAV invested in debentures with a remaining tenure above 365 days.

Comparable to

  • Put warrants
  • Intraday Short Selling (IDSS)
  • Futures
DetailsLeveraged & Inverse ETFsStructured WarrantsFutures ContractsMargin Account
UnderlyingIndexIndex, SharesIndex, Shares, CommoditiesN/A
Offer more than 2X leveraged / inverse exposureNoYesYesYes
Margin account requiredNoNo