This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Leveraged ETFs: Desperate Times

Stocks in this article: SPY GLD EEM

NEW YORK ( TheStreet) - Leveraged ETFs need to mount a new sales effort or they may go the way of the dodo.

In the wake of Edward Jones' decision to stop offering the products, UBS followed with a similar decision, citing its long-term bias and the short-term nature of these products (in nearly all cases, one day).

According to the Wall Street Journal, Wells Fargo (WFC) is reviewing its policy as well and Ameriprise Financial "told its advisers to stop soliciting the purchase of the products."

It's clear that advisers with a greater fiduciary responsibility are quickly moving to remove these products from their offerings, which FINRA has said are unsuitable for retail investors (although they recently softened their position on the products, saying they are suitable as part of sophisticated strategies monitored by financial professionals).

The SPDR 2009 ETF Mid-Year Review shows that institutional ownership of SPDR S&P 500 (SPY), SPDR Gold Shares (GLD) (GLD) and iShares MSCI Emerging Markets (EEM) was 88 percent, 45 percent and 66 percent, respectively, at the end of June.

Of two ProShares UltraShort funds, 20+ Year Treasury (TBT) (TBT), S&P 500 (SDS), and Ultra Financials (UYG), institutional ownership was 24 percent, 11 percent, and 10 percent, respectively.

These numbers may slightly overstate the involvement of retail investors. Several of the leveraged funds have a very high daily turnover-- Direxion Financials Bull 3x (FAS) traded $36 billion worth of shares but finished June with $1.7 billion in assets. Even if that's the case, it does show that of those investors holding these products over multiple periods--a strategy which FINRA says should be done by professionals--most are retail investors.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,678.70 +6.10 0.03%
S&P 500 2,057.09 +5.27 0.26%
NASDAQ 4,771.7630 +13.8840 0.29%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs