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WHY LEVERAGED ETFs ARE DANGEROUS

WHY LEVERAGED ETFs ARE DANGEROUS

          Exchange Traded Funds (ETFs) were created to create a more liquid market in sector funds. However, leveraged ETFs are designed to be tactical trading instruments, specifically not for “buy and hold” investors. Because of strict leverage requirements, even if you are correct about the direction of a market sector or the underlying investment, the complexity and leverage of many ETFs can completely destroy the performance. As a result, leveraged ETFs make up only a very small percentage of the ETF marketplace.

          Because of the misuse of ETFs, FINRA issued RN 09-31 which warns that because inverse and leveraged ETFs are typically reset every day, they are unsuitable for retail investors who plan to hold them for more than one trading session.

          For more information and a free consultation about how to recover losses your portfolio suffered due to negligence, misconduct, or investment fraud by a financial advisor or brokerage firm, contact Attorney Howard Rosenfield at 860-677-4334 or email howardrosenfield@stockbrokerproblems.com.

          Attorney Rosenfield is also available to speak on specific subject matter topics related to advisor negligence, misconduct, or investment fraud.