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Can anyone explain how to find ETFs or mutual funds that limit the amount of leverage their holdings can have? I am interested in funds that specifically limit the debt:equity ratios but limits on other measures of leverage would be interesting. Would information like this be available in the fund's prospectus for example?

Does anyone know of any ETFs or mutual funds that limit the amount of leverage their holdings can have? I've been looking around and I have found none.

I'm not talking about the ETFs or mutual funds themselves being leveraged, I'm talking about the equities they invest in.

  • I don't get it. Do you mean the Debt to Equity ratio of each holdings? – base64 Nov 10 '16 at 4:10
  • Yes, that is what i mean – user3210369 Nov 10 '16 at 4:22
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They are called Quality ETF.

This article describes it.

E.g. iShares Edge MSCI USA Quality Factor ETF (QUAL) has the following objective:

Exposure to large- and mid-cap U.S. stocks exhibiting positive fundamentals (high return on equity, stable year-over-year earnings growth and low financial leverage)

  • That's one name for one set of them. There are others. Most index funds, for example, make minimal use of leverage. – keshlam Nov 11 '16 at 6:05

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