Leveraged ETFs have been in the news a great deal lately, although the majority of the coverage has been less than flattering. Over the last week, several prominent financial institutions have ceased purchasing leveraged ETFs on behalf of their clients, citing the incompatibility of the short-term nature of these products with their long-term views on investing. Moreover, the returns that these products generate in certain markets have been criticized as misleading and even dishonest, implying that leveraged ETFs are some sort of a scam designed to rip off hard-working, middle class investors. Enough is enough. It’s time to dispel a lot of the myths surrounding leveraged ETFs that have been circulating in recent weeks. Like almost any investment, leveraged ETFs can be used inappropriately. But if used appropriately (and there are a lot of investors who are doing so), these products can be extremely powerful and efficient investment vehicles. [click to continue…]
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