As you may be aware, Wall Street firms like UBS (UBS) and Raymond James Financial (RJF) are getting out of the business of offering leveraged ETFs. I argue on Minyanville that this growing movement “is all just a way of absolving investors and their advisors of personal responsibility.”
Continue Reading Leveraged ETF Ban Spreading Like a Virus
On the same topic, Fidelity Investments became the latest firm to speak out on leveraged ETFs:
“…Leveraged and Inverse Mutual Funds are complicated instruments that should only be used by sophisticated investors who fully understand their risks. Due to the effect of compounding, operating expenses and daily resets, the performance of Leveraged and Inverse funds over longer periods of time can differ significantly from the performance of their underlying index or benchmark.”
Fidelity is striking a good middle ground here. The primary reason may be so they can keep collecting commission on leveraged ETF trades, but they’re not going so far as to declare them bad or evil or off-limits.
Disclosure: Long RJF
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