This is yet another example of regulation overreach, and as always, it will hurt worst the people who are already most disadvantaged. Ill keep investing as I want. I have a high net worth, and Ill pass your tests. Im motivated, educated, and investment savvy. I can continue to get 2-3% more per year through my judicious use of leveraged funds, which when compounded over decades makes an enormous difference in my financial future. Regulation on these funds will limit their benefit to the already privileged, like me. Such regulation is paternalistic. Adults should be allowed to judge for themselves the benefits and risks of investments. Also, if youre worried about people taking on too much risk (which you shouldnt be - its not your job), you would logically have to expand your purview to limit access to any individual stock, as decreasing diversification is another way to take on greater risk and potential reward. The problem is, the expected outcome from modest leverage used wisely within a portfolio is far better than the expected outcome from decreasing diversification. Dont do this.
Jason Hobbs Comment On Regulatory Notice 22-08
This is yet another example of regulation overreach, and as always, it will hurt worst the people who are already most disadvantaged. Ill keep investing as I want. I have a high net worth, and Ill pass your tests. Im motivated, educated, and investment savvy. I can continue to get 2-3% more per year through my judicious use of leveraged funds, which when compounded over decades makes an enormous difference in my financial future. Regulation on these funds will limit their benefit to the already privileged, like me. Such regulation is paternalistic. Adults should be allowed to judge for themselves the benefits and risks of investments. Also, if youre worried about people taking on too much risk (which you shouldnt be - its not your job), you would logically have to expand your purview to limit access to any individual stock, as decreasing diversification is another way to take on greater risk and potential reward. The problem is, the expected outcome from modest leverage used wisely within a portfolio is far better than the expected outcome from decreasing diversification. Dont do this.