While some warn that leveraged or inverse ETFs are too risky for retail investors, others argue they can play a role. Few investment vehicles are more polarizing than complex exchange-traded funds. But love them or hate them, experts tend to agree that retail investors need to tread carefully before using leveraged and inverse ETFs, said an article in The Globe & Mail on February 26. The U.S. investor Peter Lynch once said, “Never buy anything that you can't illustrate on the back of a napkin," says Eric Kirzner, a professor at the Rotman School of Management who holds the John H. Watson chair in value investing. “And you can't with these." “These tools aren't for everyone," says Howard Atkinson, president of Toronto-based Horizons ETFs Inc., a firm that offers leveraged and inverse funds. “If you're going to buy, hold and forget, don't use these. … You need somewhat of a trader's mentality for them." Most investors know that ETFs are securities that track major indices or economic sectors but are traded like stocks. Complex ETFs are riskier: Leveraged funds, for example, use derivatives and other means to magnify returns. If you buy a double-leveraged ETF and the underlying index goes up, your returns go up twice as much. The opposite is also true: If the underlying index goes down, your returns go down twice as much. The returns work the same way with double-leveraged inverse ETFs, which are set up to perform the inverse of the index they are tracking, effectively shorting the market.