FINRA Warns Against Leveraged ETFs

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FINRA Warns Against Leveraged ETFs

Several brokerage firms have stopped selling leveraged exchange traded funds (ETFs) after the Financial Industry Regulatory Authority Inc. warned brokers that they “typically are unsuitable for retail investors” who hold them longer than a day .

Exchange Traded Funds (ETFs) are funds that track indexes like the NASDAQ-100 Index, S&P 500, Dow Jones, etc. When you buy shares of an ETF, you are buying shares of a portfolio that tracks the yield and return of its native index. The main difference between ETFs and other types of index funds is that ETFs don’t try to outperform their corresponding index, but simply replicate its performance. They don’t try to beat the market, they try to be the market .

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Edward Jones banned the sell of ETFs shortly after the announcement and LPL prohibited the sale of leveraged ETFs that seek more than two times the long or short performance of the target index .

However there are still those in the industry that are touting the viability and virtues of leveraged ETF’s and are trying to get these firms to begin selling these types of funds again.

If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies.

By |March 24th, 2014|FINRA News|

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