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Both leveraged and inverse exchange-traded products (ETPs) are intended primarily for short-term trading or hedging strategies and are generally not suitable for long-term holding due to daily compounding and high volatility.

Leveraged and inverse ETPs rebalance their exposure daily, which introduces compounding risk and can cause their returns over longer periods to differ significantly from the target multiple of the underlying index, making them ill-suited for a buy-and-hold strategy.

ETPs prices may not always correlate precisely with the underlying index, particularly during times of market stress or issuer-specific credit events (tracking error).

Leveraged ETPs are designed to deliver a multiple (e.g., 2× or 3×) of the daily performance of an underlying asset. For example, if the underlying index rises by 1% in a day, a 2x leveraged ETP could aim to rise by 2%.

Leverage amplifies losses, making these products highly volatile and riskier than non-leveraged ETPs. Additionally, daily compounding can affect returns over longer periods, regardless of the performance of the underlying assets.

Inverse ETPs are designed to deliver the opposite daily performance of an underlying asset. For example, if the underlying index falls by 1% in a day, a 1x inverse ETP could aim to rise by 1%.

Inverse ETPs are highly risky. Losses are magnified if the asset rises, and daily compounding can negatively impact long-term returns regardless of the asset's performance.