Dear Sirs, I have been trading leveraged etfs for many years. Before that I had traded futures which I found to be very dangerous, much more so than etf. I did not really own the futures because they had an expiration date and because the leveredge was so high that they were subject to being automatically liquidated by the broker with a margin call. With etfs a least you own the shares , there is a slight decay in value over time though. But the benefits can far outweigh the slight loss of value long term. These types of etfs have become very popular with investors even for long term reasons. Look at the returns of TQQQ vs. QQQ the nasdaq index and for the year TQQQ comes close to its stated 3 times leveraged return. It is a great way to invest ,that is why they are so popular. I also trade Jnug and Nugt the gold miner etfs that outperform GDX the unleveraged version. Occasionally there are problems with them though . I remember Ugaz that plummeted to a fraction of its value, (so did a popular vix leveraged etf.) This was not a result of the natural gas price going down in proportion to the etf. It was mechanical problems as to how it was structured and how it relied upon the futures market for pricing. So many popular etfs have already been delisted UGLD and USLV were delisted but can still be traded as ugldf and uslvf. They trade now at such a low volume they are not viable to trade for me. Adults should be able to make their own decisions on what to trade and what level of risk they wish to assume. There is plenty of information out there explaining the pro and cons of leverage. Regulators I think should spend more time policing the people who construct the ETFS to make sure some do not melt down again. Stocks have problems too remember Enron.
Dan James Comment On Regulatory Notice 22-08
Dear Sirs, I have been trading leveraged etfs for many years. Before that I had traded futures which I found to be very dangerous, much more so than etf. I did not really own the futures because they had an expiration date and because the leveredge was so high that they were subject to being automatically liquidated by the broker with a margin call. With etfs a least you own the shares , there is a slight decay in value over time though. But the benefits can far outweigh the slight loss of value long term. These types of etfs have become very popular with investors even for long term reasons. Look at the returns of TQQQ vs. QQQ the nasdaq index and for the year TQQQ comes close to its stated 3 times leveraged return. It is a great way to invest ,that is why they are so popular. I also trade Jnug and Nugt the gold miner etfs that outperform GDX the unleveraged version. Occasionally there are problems with them though . I remember Ugaz that plummeted to a fraction of its value, (so did a popular vix leveraged etf.) This was not a result of the natural gas price going down in proportion to the etf. It was mechanical problems as to how it was structured and how it relied upon the futures market for pricing. So many popular etfs have already been delisted UGLD and USLV were delisted but can still be traded as ugldf and uslvf. They trade now at such a low volume they are not viable to trade for me. Adults should be able to make their own decisions on what to trade and what level of risk they wish to assume. There is plenty of information out there explaining the pro and cons of leverage. Regulators I think should spend more time policing the people who construct the ETFS to make sure some do not melt down again. Stocks have problems too remember Enron.