I completely oppose restrictions that could impact my ability to trade in both leveraged and inverse ETF's. The US equity markets have recently undergone several bouts of volatility so far in the first 4 months of 2022 with the S&P 500 being down about 14% currently. In this current environment inverse ETF's have been most instrumental to me in obtaining short exposure to hedge my portfolio during the recent down moves (without having the additional nonlinear dynamic issue of volatility pumped up option premiums of put options to consider if one were using options as a hedge instead for instance) while leveraged ETF's have also allowed me to tailor the trading portfolio exposure I desire to achieve (which given the zero commission structure that brokers now have in place allows me to adjust money allocated into these funds accordingly to offset the known impact of the daily reset that these funds have) in such a volatile environment while maintaining a considerable cash reserve that a non-levered ETF portfolio would not allow given the lack of leverage. In short both of these funds have allowed me to thrive in this environment by maintaining higher cash balances and mitigating risk to allow for returns that are much more favorable than a non levered portfolio just like they did during the COVID crash in March 2020. Indeed beyond the bouts of market volatility that I specifically cited here, I have had a successful experience in general in utilizing both leveraged and inverse ETFs for many years now through different market cycles to achieve risk adjusted portfolio returns higher that non-levered ETFs would have allowed me to achieve while maintaining a healthy cash reserve. Given my successful experience, I strongly and completely oppose any regulation that would impede my ability to trade in these funds to successfully manage my portfolio.
John Zak Comment On Regulatory Notice 22-08
I completely oppose restrictions that could impact my ability to trade in both leveraged and inverse ETF's. The US equity markets have recently undergone several bouts of volatility so far in the first 4 months of 2022 with the S&P 500 being down about 14% currently. In this current environment inverse ETF's have been most instrumental to me in obtaining short exposure to hedge my portfolio during the recent down moves (without having the additional nonlinear dynamic issue of volatility pumped up option premiums of put options to consider if one were using options as a hedge instead for instance) while leveraged ETF's have also allowed me to tailor the trading portfolio exposure I desire to achieve (which given the zero commission structure that brokers now have in place allows me to adjust money allocated into these funds accordingly to offset the known impact of the daily reset that these funds have) in such a volatile environment while maintaining a considerable cash reserve that a non-levered ETF portfolio would not allow given the lack of leverage. In short both of these funds have allowed me to thrive in this environment by maintaining higher cash balances and mitigating risk to allow for returns that are much more favorable than a non levered portfolio just like they did during the COVID crash in March 2020. Indeed beyond the bouts of market volatility that I specifically cited here, I have had a successful experience in general in utilizing both leveraged and inverse ETFs for many years now through different market cycles to achieve risk adjusted portfolio returns higher that non-levered ETFs would have allowed me to achieve while maintaining a healthy cash reserve. Given my successful experience, I strongly and completely oppose any regulation that would impede my ability to trade in these funds to successfully manage my portfolio.