There are a number of ETFs available through major providers that offer investors two or three times the returns of the index or commodity they track.
David Coombs, head of multi-manager at Rathbones, told FE Trustnet recently that he has been using a 1.8-times leveraged ETF on the US market to get exposure to the recent rally there.
However, industry experts warn that there are serious misconceptions about how the products operate and only investors willing to spend extra time managing their portfolio should consider using them.
As an example, the ETFX FTSE 100 Leveraged 2x GDP [FNP8] fund offers investors twice the daily returns of the FTSE 100.
However, a graph of its performance over the past year shows that it has not produced twice the returns of the index over that period.
Performance of fund vs index over 1yr
Source: FE Analytics
It has, however, recorded twice the volatility, scoring 23.6 per cent over the past year while the FTSE 100 has scored 11.65 per cent.
The reason for this is that gains and losses are calculated daily on the moves in the market that have occurred on that day.
Matt Johnson, head of distribution EMEA at ETF Securities, said: "The key is all about understanding what the product is going to do."
"The biggest misconception is that investors think that if the market moves in the direction they want, they will make a lot of money."
"However, if it goes up in a volatile fashion with lots of up-and-down days, that might not be the case."
He says that the products are only to be used for short-term exposure or hedging purposes.
"They are not suitable to be put in a long-term buy-and-hold portfolio, they have to be used tactically, if you think you need a hedge or you need quick exposure," he added.
"These are not suitable for someone who is thinking 'my pension is looking a bit dull, I need to give it some more risk'."
Although they are short-term investments, Johnson points out that some products can do well over a slightly longer time-frame.
The ETFS 3x Long USD Short GBP [M2H9] fund has benefited from a steady decline in the value of sterling and the strengthening of the dollar.
Data from FE Analytics shows that it has risen by 17.66 per cent in the past three months, while the FTSE All Share has risen just 10.61 per cent.
Performance of fund over 3 months
Source: FE Analytics
Adam Laird (pictured), passive investment manager at Hargreaves Lansdown, says that the products' complicated nature means they are rarely appropriate for a retail client.
"They can be very useful in some respects, but there are a number of reasons we think they are on the whole not right for the majority of retail clients," he explained."Chiefly, they can be difficult to understand and won’t do what clients necessarily expect."
"They are designed to be very short-term and are rebalanced daily, so you have got the leveraged percentage move over a very short-term period."
"If you hold it for a few weeks or even days, you might find the results are more or less than you expected."
"They can also be quite expensive. Sometimes the excess total expense ratio can be higher than other products on the same index."
This has a negative effect on returns, although charges are still cheap compared with active funds.
The ETFX FTSE 100 Leveraged 2x GDP [FNP8] fund has a total expense ratio (TER) of just 0.5 per cent.
Johnson explains that the extra costs derive from the extra expense that is needed to run the products.
"It’s straightforward to hedge a normal ETF but not to hedge a leveraged product against the volatile daily moves."
Johnson says that the products can be suitable for retail investors, but only if they have a clear idea of how they work and how they are going to be used tactically in the short-term.
"Investors should know that a leveraged ETF product can perform very poorly in a sideways or downward market," he added.
ETF Securities, along with other providers, runs leveraged ETFs that track commodities, stock indices, currencies and a variety of other measures.