Leveraged and inverse ETF's are a very practical hedging tool that I have been using for many years. I am an experienced (over 40 years) professional investor that understands the mechanics of how and when these tools work, their shortcomings and their costs. Absent these cheap and very liquid tools, the cost to hedge an equity (or bond) portfolio can be very costly and time consuming. I agree that these investment products may be dangerous in the hands of an inexperienced investor, but that is not an argument to ban them. The only investment company that I know of that has banned these products is Vanguard and I have voiced my displeasure to them in this regard. I do find it strange that regulators are addressing this purported problem when I haven't seen any controversy covering this topic in the Wall Street Journal, Barron's or Business Week.
Peter McCarthy Comment On Regulatory Notice 22-08
Leveraged and inverse ETF's are a very practical hedging tool that I have been using for many years. I am an experienced (over 40 years) professional investor that understands the mechanics of how and when these tools work, their shortcomings and their costs. Absent these cheap and very liquid tools, the cost to hedge an equity (or bond) portfolio can be very costly and time consuming. I agree that these investment products may be dangerous in the hands of an inexperienced investor, but that is not an argument to ban them. The only investment company that I know of that has banned these products is Vanguard and I have voiced my displeasure to them in this regard. I do find it strange that regulators are addressing this purported problem when I haven't seen any controversy covering this topic in the Wall Street Journal, Barron's or Business Week.