Domestic leveraged funds belong to the leveraged share (also called aggressive share) of graded funds. Graded fund refers to a fund variety with two levels (or multi-levels) of risk-return performance with certain differentiated fund shares through the decomposition of fund income or net assets under a portfolio. Its main feature is to divide the fund products into two types of shares and give different income distribution respectively.

Extended data

Most leveraged funds passively track industry indexes and mainly allocate mainstream stocks in the industry sector. Once the sector is started, due to the blessing of leverage effect, the increase of leveraged funds is often better than most stocks in the sector.

Leveraged funds are not suitable as a tool for long-term asset allocation. Long-term asset allocation focuses on the long-term risk-return exchange efficiency of assets, and the simplest indicator is the Sharp ratio to measure the risk-adjusted return of funds.

As long as the market fluctuates, in the long run, the investment will lose money, that is, the fluctuation will drag down the long-term income. Moreover, the higher the leverage ratio, the more obvious the drag of volatility on long-term compound income. In addition, in the down market, leveraged funds have amplified investors' profits and losses.

Baidu Encyclopedia-Leveraged Fund