This Day On The Street
Continue to site
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

Top ETF Stories of 2009: Leveraged Funds

ProShares was the original purveyor of leveraged funds and Michael Sapir, chairman and chief executive of ProFunds Group, is naturally defensive about the recent backlash. Sapir asserted in a recent Wall Street Journal article that leveraged funds are "not more complicated than numerous funds in the marketplace used by retail investors and recommended by brokers."

He has a point. Futures-based commodity ETFs also employ a potentially dangerous level of complexity, while ETNs expose investors to risk they don't always understand. Older ProShares leveraged funds such as UltraShort Real Estate (SRS), UltraShort Financials (SKF) and Ultra Financials (UYG) employed a somewhat simpler methodology than their contemporary peers. As it is impossible to generalize about the nature of all ETFs, it is also impossible to generalize about the nature of leveraged ETFs.

Leveraged ETFs can be useful tools for professional traders looking to hedge positions on an intraday basis. These funds have been marketed to the public, however, and until recently the image has been somewhat deceptive.

FINRA posted a warning on its Web site earlier this month about leveraged ETF products, and increased regulatory scrutiny is likely coming down the line. No one would argue that matches and blowtorches are the same thing -- but there is a place for both in harnessing the power of fire. There is a place for both leveraged and index ETFs, but investors must understand which ones they need.


Split Could Set Straight Two Direxion ETFs

Originally published 07/07/09 09:00 AM EDT

The combination of market volatility and the methodology of Direxion Shares Daily Financial Bull (FAS) ETF and Direxion Shares Daily Financial Bear (FAZ) has eroded the per-share value of these ETFs, prompting the issuer to notify investors of reverse splits planned for July 8.

3 of 8

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
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!
SYM TRADE IT LAST %CHG
UYG $146.29 -0.37%
USO $19.58 -0.46%
SKF $49.03 -0.83%
SRS $11.81 0.17%
FAS $123.96 -0.37%

Markets

DOW 18,070.57 -9.57 -0.05%
S&P 500 2,111.93 -5.76 -0.27%
NASDAQ 5,060.8070 -31.2780 -0.61%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs