7 of the Riskiest ETFs Investors Can Buy Today | Investing

What qualifies an exchange-traded fund (ETF) as excessively risky? Some investors might point to high historical volatility, where outsized day-to-day fluctuations in portfolio value can encourage poorly timed buying and selling decisions. Others focus on the prospect of permanent capital loss, particularly when an ETF’s strategy creates the potential for catastrophic drawdowns.

Both concerns have figured into the Securities and Exchange Commission’s (SEC) oversight of increasingly complex ETFs. Leveraged and inverse funds, for example, use derivatives to amplify or reverse the daily returns of an underlying index or asset. Their exposure can produce substantial short-term gains, but it also magnifies losses, while daily resets and compounding can cause longer-term performance to diverge significantly from the leverage multiple investors might expect.

In December 2025, the SEC pushed back against proposals for ETFs offering three to five times leveraged exposure. As ETF.com reported, the obstacle was Rule 18f-4. Under its relative value-at-risk test, most ETFs are restricted to no more than twice the daily leveraged exposure when measured correctly against their “designated reference portfolio.”

Certain three-times leveraged ETFs that were already operating before Oct. 28, 2020, remain grandfathered under an exception. However, in October 2026, the SEC permitted several new three-times leveraged cryptocurrency and commodity ETFs from Volatility Shares to list on the Cboe. These ETFs used a different regulatory pathway via the Securities Act of 1933, rather than the Investment Company Act of 1940, to operate outside Rule 18f-4’s leverage restrictions.

Prediction-market ETFs have faced regulatory scrutiny as well. In May 2026, the SEC delayed the launch of more than two dozen proposed funds tied to outcomes such as elections, recessions and other real-world events, requesting additional information about their structures and disclosures. Morningstar highlighted concerns surrounding binary outcomes, market integrity, insider trading and whether retail investors could adequately understand the underlying exposures.

Even without these proposed products reaching the market, investors have no shortage of ways to take substantial risks through existing ETFs. Some offer legitimate speculative or hedging applications for sophisticated traders, but their prospectuses typically warn about volatility and the possibility of significant capital losses. As with any complex financial product, buyer beware.

Here are seven of the riskiest ETFs investors can buy today:

“XX is a first-of-its-kind ETF that seeks to offer investors long-term leverage on the S&P 500 Index,” says Thomas DiFazio, ETF strategist at Roundhill Investments. “By using long-dated call options targeting an implied index strike price of 10,000 that expire in January 2030, XX can avoid the daily-reset volatility decay associated with leveraged ETFs.” The ETF uses custom FLEX options for implementation.

“That said, XX is a highly speculative product suitable only for investors who can risk a complete loss of their investment if the S&P 500 is not above 10,000 at the target date,” DiFazio explains. “But because the fund buys options rather than borrowing money, it cannot lose more than the initial principal.” XX is also significantly more expensive than the average S&P 500 ETF with a 0.99% expense ratio.

In February 2018, an event dubbed “Volmageddon” saw several exchange-traded products offering inverse exposure to short-term futures on the Cboe Volatility Index (VIX) implode after a sudden spike in market volatility. Despite that episode, similar strategies remain available in 2026. One notable example is SVIX, which launched in March 2022 and has $147 million in assets under management.

This ETF seeks to deliver the inverse of the daily performance of a short-term VIX futures index by maintaining short positions in front-month contracts, currently October and November 2026 futures. To help mitigate the risk of catastrophic losses during volatility spikes, SVIX also holds VIX call options as a hedge. Investors buying this ETF should be aware that it produces a Schedule K-1 for tax reporting.

SVIX’s strategy has been likened to “picking up pennies in front of a steamroller.” Investors can accumulate incremental gains when markets remain calm, but a sudden volatility spike can wipe out principal. UVXY takes the opposite approach, seeking long exposure to short-term VIX futures rather than betting against them. However, its one-and-a-half-times daily leverage introduces additional risk.

The trade-off is essentially reversed. UVXY can generate substantial gains when volatility spikes but tends to lose money steadily when markets remain calm. Unfortunately for long-term holders, calm markets are more common than sustained volatility spikes. As a result, UVXY has recorded an annualized loss of approximately 71% over the past decade, requiring numerous reverse stock splits to stay afloat.

Yale economist Aleh Tsyvinski has suggested allocating between 1% and 6% of a portfolio to Bitcoin, depending on an investor’s expectations for its future returns. Even these relatively modest allocations can materially affect portfolio risk and returns because of Bitcoin’s historically high volatility. Investors seeking an even more aggressive Bitcoin bet can consider BITU rather than using margin.

This leveraged ETF uses swaps and futures to target twice the daily performance of the Bloomberg Bitcoin Index. However, leverage magnifies losses as well as gains, while daily compounding can further erode returns during volatile markets. Amid Bitcoin’s recent bear market, BITU lost 62.6% of its value over the trailing one-year period through Sept. 30. The ETF charges a 0.98% expense ratio.

Beta measures a stock’s sensitivity to movements in a benchmark. The S&P 500 has a beta of 1 relative to itself, while stocks with betas above 1 tend to experience larger price swings than the index. Conversely, stocks with betas below 1 generally exhibit less volatility relative to the benchmark. Defensive investors often favor low-beta stocks, while growth investors may prefer high-beta exposure.

HIBL takes this concept further by seeking three times the daily performance of the S&P 500 High Beta Index. Technology stocks account for just under half of the underlying index, adding substantial sector concentration risk. HIBL achieves its leveraged exposure primarily through swaps, which magnify daily gains and losses. These factors contribute to the ETF’s relatively high 0.98% expense ratio.

The iShares 20+ Year Treasury Bond ETF (TLT) is among the riskiest conventional fixed-income ETFs, with an effective duration of 14.7 years making it highly sensitive to changes in bond yields. Rising yields can produce substantial capital losses, as demonstrated in 2022, when TLT lost approximately 31%. TMF takes this exposure further, targeting three times the daily performance of TLT’s benchmark via swaps.

The most favorable scenario for TMF would be a deflationary recession in which long-term Treasury yields fall sharply, driving bond prices higher. However, its daily leverage also magnifies losses when yields rise, while compounding can erode returns during volatile, sideways markets. Combined with a 0.9% expense ratio, these factors make TMF particularly difficult to hold over extended periods.

Some highly risky ETFs offer eye-catching, often double-digit yields instead of leveraged or inverse exposure. For example, ULTY currently offers a 60% annualized distribution rate based on its most recent weekly payout, generated through an options-writing strategy focused on high-volatility stocks. However, ULTY’s high income stream has not translated into equally impressive total returns.

Year to date through Sept. 30, the ETF returned 9.9% at net asset value (NAV), assuming perfectly reinvested distributions and before taxes. By comparison, simply holding the Vanguard S&P 500 ETF (VOO) would have returned 12.7% total despite offering a substantially lower yield. ULTY is also very pricey for an ETF, with a 1.4% gross expense ratio versus just 0.03% for VOO.