Comments: I am a licensed 6,7,63,65 FA, it has been 17 years since I passed my series 6 exam. I have a BS in Business and a MBA. I have almost 30 years of banking and finance experience. Leveraged ETFs are misunderstood and misevaluated by regulators and investors. If you examine the returns of leveraged ETFs that track major indices you will find that while they do not offer a superior "risk adjusted return", they do offer unprecedented returns in terms of total dollar returns. For example, if you invested $10,000 into SPXL in 12/2008 (inception) today you have close to $500k. To compare, an investment of $10,000 into the SP500 would be worth $64k today. The "risk adjusted return" of the SP500 would be superior but the total dollar return of the leveraged ETF is overwhelmingly better. I know of no other investment that offers such return potential that is available on such a low cost basis and easily accessible and investable by any retail investor. If you were to ask average retail investors if they would be willing to risk a small amount of money for the possible returns a leveraged ETF can provide, the overwhelming response would be "yes". I am personally invested in leveraged ETFs in amounts I am comfortable with, I understand the risks and rewards. Instead of creating nonsense rules to keep investors out of leveraged ETFs, increase investor education and increase the requirements to bring leveraged products to market.
Bryin Sills Comment On Regulatory Notice 22-08
Comments: I am a licensed 6,7,63,65 FA, it has been 17 years since I passed my series 6 exam. I have a BS in Business and a MBA. I have almost 30 years of banking and finance experience. Leveraged ETFs are misunderstood and misevaluated by regulators and investors. If you examine the returns of leveraged ETFs that track major indices you will find that while they do not offer a superior "risk adjusted return", they do offer unprecedented returns in terms of total dollar returns. For example, if you invested $10,000 into SPXL in 12/2008 (inception) today you have close to $500k. To compare, an investment of $10,000 into the SP500 would be worth $64k today. The "risk adjusted return" of the SP500 would be superior but the total dollar return of the leveraged ETF is overwhelmingly better. I know of no other investment that offers such return potential that is available on such a low cost basis and easily accessible and investable by any retail investor. If you were to ask average retail investors if they would be willing to risk a small amount of money for the possible returns a leveraged ETF can provide, the overwhelming response would be "yes". I am personally invested in leveraged ETFs in amounts I am comfortable with, I understand the risks and rewards. Instead of creating nonsense rules to keep investors out of leveraged ETFs, increase investor education and increase the requirements to bring leveraged products to market.