Leveraged ETFs: Comprehension Is Key

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June 25, 2009 11:10am ETF BASIC NEWS

The controversy surrounding ultra long, ultra short and other leveraged ETFs has reached a fever pitch while the funds, particularly the Direxion Financial Bear 3x ETF(FAZ Quote) and Direxion Financial Bull 3x ETF(FAS Quote), continue to grow in trading volume.

While leveraged ETF funds are not a new phenomenon, they have hit the mainstream and have drawn the attention of regulatory agencies like FINRA and commentators asserting that investors should be protected against these products. Like all financial tools, the power of leveraged ETFs is truly in the hands of the investor, and the danger lies in an investor’s unwillingness or inability to understand them.

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