Leveraged fund is a kind of hedge fund. Domestic leveraged funds belong to the leveraged share (also called aggressive share) of graded funds. Graded fund refers to a fund variety with two levels (or multi-levels) of risk-return performance with certain differentiated fund shares through the decomposition of fund income or net assets under a portfolio. Its main feature is to divide the fund products into two types of shares and give different income distribution respectively. Graded funds are usually divided into two types of shares: low-risk income side (agreed income share) sub-funds and high-risk income side (leveraged share) sub-funds. Take a graded fund product X(X is called parent fund) as an example, which is divided into A share (agreed income share) and B share (leveraged share). Share A has agreed on a certain rate of return, and all the remaining assets of fund X after deducting the principal and accrued income of share A are classified as share B, and the losses are borne by the holders of share B within the limit of share B's net asset value. When the overall net value of X falls, the net value of B shares falls first; Accordingly, when the overall net value of X rises, the net value of share B will also rise before share A. Generally, share A can get the distribution benchmark income first, share B can maximize the principal and benchmark income of the priority share, and share B usually gains some leverage by participating in the distribution of residual income or taking losses to a greater extent. It has a more complex internal capital structure, and its nonlinear income characteristics make it imply options.

The physical explanation of the lever principle is: pry the lifted object with a small force.

In investment, adding leverage is actually borrowing money. With this leverage, you can use less principal and get big profits.