These leveraged short funds are soaring as stocks and bonds sell off. Here's how they work

The steep drops for the stock and bond markets in recent weeks have been a windfall for the funds that make leveraged bets against some of Wall Street's benchmarks. The list of top-performing exchange-traded funds since Sept. 19 — the day before the Federal Reserve released new projections that showed fewer rate cuts in 2024 — is dominated by leveraged and leveraged inverse products.

01%, while the long-only iShares 20+ Year Treasury Bond ETF costs 0.15%. The other major detail is that the funds are designed as short-term trading vehicles, and many even have "daily" in their name to signal this. "Most leveraged and inverse ETFs 'reset' daily, meaning that they are designed to achieve their stated objectives on a daily basis," the U.S. Securities and Exchange Commission said Aug. 29 in an investor bulletin .

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