What does the chart show?
The chart highlights the remarkable growth in leveraged ETF assets over recent years. What was once a niche corner of the ETF market has become one of its fastest-growing segments, driven by investors seeking amplified exposure to major equity indices, technology stocks and high-profile companies such as Nvidia and Tesla. The trend reflects a growing appetite for tactical investing, with leveraged products increasingly being used not only by professional traders but also by retail investors. The acceleration in assets under management suggests that investors are becoming more comfortable accessing leverage through the ETF wrapper rather than through traditional margin accounts or derivative instruments.
Why this is important
The growth of leveraged ETFs matters because their impact extends beyond the investors who hold them. To maintain target leverage ratios, these products rebalance daily, creating additional trading activity in underlying securities and derivatives. As assets grow, these flows can amplify market moves, particularly during periods of heightened volatility.
South Korea illustrates these risks. Leveraged ETFs, alongside Samsung Electronics and SK Hynix, accounted for more than 70% of trading value in the country's US$4.3 trillion equity market in June 2026. The two companies' combined weight in the KOSPI reached 52%, while some semiconductor-linked products recorded daily swings of up to 131%.
While leveraged ETFs can boost returns in strongly trending markets, they can also magnify losses and generate outcomes that diverge significantly from investor expectations over longer holding periods. In response to these risks, South Korea's Financial Services Commission suspended new single-stock leveraged ETF listings on 16 July 2026, increased minimum deposit requirements, and banned the marketing of such products by securities firms and asset managers.
The growing popularity of leveraged ETFs therefore has important implications for market volatility, liquidity and investor risk, making it essential for regulators and market participants to understand their market impact as part of their decision- making process.
Surging oil prices and renewed US tariffs revived global inflation concerns, pushing bond yields higher and reducing expectations for easier monetary policy.
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New tariffs intensified trade tensions: President Trump imposed duties of 10%–12.5% on imports from 60 trading partners, including China and the EU, citing concerns over forced-labour enforcement.
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Brazil faced additional trade pressure: A separate 25% tariff was applied to billions of dollars of Brazilian exports, including machinery, ethanol, clothing and wood products.
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Oil revived inflation and interest-rate concerns: Rising energy prices and Treasury yields led markets to increase expectations that the Federal Reserve could tighten policy later in the year.
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The Iran conflict became a domestic political issue: US military casualties, rising economic costs and pressure on defence resources increased scrutiny of the administration’s Middle East strategy.
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Andy Burnham began his premiership: The new Prime Minister replaced Keir Starmer and prioritised the cost of living, regional devolution and economic regeneration.
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A new economic leadership structure emerged: Burnham established “No10 North” in Manchester and revived the National Economic Council to shift more decision-making away from Westminster.
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Financial-services policy remained broadly unchanged: The government indicated it would retain the previous administration’s City-friendly competitiveness and regulatory reform programme.
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Markets gave the new government a cautious welcome: Investors saw some room for targeted spending, but remained sensitive to fiscal discipline, gilt yields and the credibility of the new Treasury team
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The ECB held interest rates unchanged: Policymakers paused after June’s increase but left open the possibility of further tightening as higher energy costs threatened inflation.
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Banks tightened lending conditions: Eurozone lenders reported stricter credit standards and expected further tightening because of geopolitical, economic and energy-related risks.
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US tariffs tested transatlantic relations: EU officials questioned Washington’s forced-labour justification, although exemptions for selected products limited some of the immediate economic impact.
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The EU expanded sanctions against Russia: A 21st sanctions package targeted Russian banks and cryptocurrency networks, while retaining a limited exemption for transfers of Russian LNG.
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New US tariffs on China increased external pressure: Chinese goods were included in Washington’s latest tariff measures, adding to uncertainty surrounding exports and global supply chains.
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Japan’s yen fell to a 40-year low: Higher US yields, rising oil prices and doubts over Japan’s fiscal and monetary policy direction pushed the currency beyond ¥163 per dollar
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Sanae Takaichi unveiled her economic strategy: Japan’s Prime Minister proposed large-scale public and private investment in growth industries, while reaffirming the Bank of Japan’s formal independence.
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Middle East tensions spread to additional shipping routes: Houthi attacks and threats against Saudi ports created a second potential disruption point alongside the Strait of Hormuz.
