Investors Want Big Bets on Tesla and Nvidia Stock. Leveraged ETFs Are Falling Short.

Leveraged exchange-traded funds offer investors a tantalizing promise—doubling the daily returns of some of the market’s hottest stocks like Tesla and Nvidia Lately, they have been missing their goal, according to a new Morningstar report. Leveraged ETFs use complex derivatives like swaps contracts to offer investors magnified bets on an index or, increasingly, on a single stock. Many offer to double the target’s daily returns—although some offer to boost exposure just 1.5 times or up to three times.

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