Final answer:
An inverse leveraged ETF uses financial derivatives to provide a multiple of the inverse performance of an underlying index, designed to profit from index declines.
Step-by-step explanation:
The underlying structure of an inverse leveraged ETF consists of various financial derivatives such as swaps, futures contracts, and other financial instruments that are used to achieve the fund's goal of providing a multiple of the inverse performance of the underlying index. In essence, these ETFs are designed to increase in value when the tracked index falls, with the level of leverage amplifying the returns in proportion to the decline of the index. However, due to daily rebalancing and the compounding of daily returns, the long-term performance of inverse leveraged ETFs can differ significantly from the multiple of the inverse performance of the index over longer periods.