Wednesday, March 9, 2011

Misuse of leveraged and inverse ETFs by financial advisors

Registered Rep reports that financial advisors have been misusing complex and highly risky leveraged ETFs for their unsophisticated clients:

"The problem is, while inverse/leveraged funds are appropriate for some sophisticated investors in small doses, they have been sold more aggressively in some cases. Inverse/leveraged funds are best for institutional or high-net-worth investors who want to hedge exposure and protect against short-term market issues, says David Kathman, senior mutual fund analyst with Morningstar. Allocations should be no more than about 5 percent, he added. 'Even then, I would hope they would be cautious because these types of things can turn on a dime.'”

Registered Rep notes however, that advisors have been putting up to 30% of unsophisticated clients' assets in these unsuitable vehicles. The article warns that people should "[e]xpect a wave of claims this year against financial advisors and broker/dealers who recommended certain Direxion, Rydex and ProFunds leveraged and inverse funds, last year's worst performing mutual funds, say securities attorneys."


Unknown said...

A good informative post that you have shared and thankful your work for sharing the information. Got some appealing information and would like to give it a try. Applaud your work and keep sharing your information.Really impressed! Everything is very open and very clear clarification of issues.
Call Option || Option Tips || Stock Option Tips || Options || Nifty Options

Unknown said...

I had no trouble navigating through all the tabs as well as related info. The site ended up being truly simple to access.
Intraday Nifty Future Tips
Share market tips
Share and Earn.

Unknown said...
This comment has been removed by the author.
Unknown said...

I’m satisfied that you simply shared this useful information with us.
Commodity tips
Stock Market
Share Market
Nse Tips
Bse Tips

Unknown said...

Selective Financial Services provides the project funding for business and also provide the funding investment services to the investors.. We are an investment and financial adviser company that strives to provide expert solutions to create lasting values, for investors, in transactions in which we invest funds, or our financial expertise, and for the companies and individuals.

Unknown said...

Do you seek funding and the bank you deal with on a day to day basis has refused to help you?

You might qualify for our new concept and get funded with our help.
Our focus is on socially responsible, green, energy producing projects. The facility is however not limited to these basics, as long as you have a strong management team, a viable business plan, and exceptional growth potential. We also enable finance for growth and consider any commercial business with the potential for a high ROI already within the first year. And we can work with any legal financial transaction offering an above average return on investment.
If your requirement is within these basics, please let us have your answer to this simple question: "Would your own bank provide you with finance, if we guarantee for your loan through Deutsche Bank?"
If you see chances to get funded on that basis, then you should tell us how much money you seek. We will engineer a solution for your immediate funding requirement and explain how you can put this concept to work for you.

Send an email directly to now and visit