- What are leverage and inverse indices and why are they important?
The S&P Leverage and Inverse Indices aim to replicate the daily performance of their underlying indices with a constant multiplicative factor, positive or negative, with or without embedded borrowing and lending costs. They offer market participants short-term trading tools for hedging and leveraging purposes. They also provide benchmarks for leverage and inverse products, such as leverage and inverse mutual funds, exchange-traded funds, exchange-traded notes, etc.
- What are the underlying securities of leverage and inverse indices?
The underlying futures indices could include equity futures indices, currency futures indices, commodity futures indices, and VIX® futures indices, such as the Dow Jones Industrial Average Futures Index, S&P U.S. Dollar Futures Index, S&P GSCI Crude Oil, and S&P 500 VIX Short-Term Futures Index.
- What return types are there for leverage and inverse indices?
For equity-based leverage and inverse indices, the index return types follow the underlying indices and can be measured in price return, total return, or net total return.
For futures-based leverage and inverse indices, both excess return indices and total return indices are calculated. The difference in excess return and total return is explained in question 4.