The Financial Industry Regulatory Authority (FINRA) has completed an initial information sweep of U.S. firms that sell leveraged ETFs, seeking to gather information about sales of these products to investors with accounts of less than $10 million. Leveraged funds, which seek to amplify daily returns on a benchmark equity or bond index by using leverage, have been the topic of much debate lately in the ETF industry. While the securities are well-suited for investors such as hedge funds and day traders, numerous parties have expressed concern that they could be used improperly by a less sophisticated breed of investor. Due to the compounding of returns, the performance of leveraged ETFs over extended periods of time can vary in both magnitude and direction from the return on the underlying index, an understanding that may elude “average” investors. [click to continue…]
Leveraged ETFs have quickly become the hot-button issue in the ETF industry, dividing investors and observers into two distinct camps. On the one side are sophisticated day traders who believe these funds, which use derivatives and other complex financial instruments to provide amplified daily returns on a target index, are the greatest thing since sliced bread. And on [...]
President Barack Obama is expected this week to announce sweeping changes to the way the much-maligned U.S. financial industry is regulated. The changes, which are to be unveiled Wednesday, are expected to include the development of a more centralized regulation system and enhanced consumer-protection capabilities. Speaking on the new developments, Treasury Secretary Timothy Geithner noted [...]
After growing at a torrid pace in 2008, the ETF industry had showed signs of slowing down through the first four months of 2009. But May represented a return to old form, with more than $14 billion in new assets flowing into ETFs during the month according to Morningstar, the largest monthly inflow of the [...]
