Briefly Noted

Leveraged and Inverse ETFs: Extra Risks for Buy-and-Hold Investors

The SEC and FINRA have issued an alert expressing concern that individual investors may be confused about the performance objectives of leveraged and inverse exchange-traded funds (ETFs).

Typically these products are designed to achieve their stated performance objectives on a daily basis. The two regulatory agencies have issued an alert concerning leveraged and inverse ETFs because they fear some investors might invest in the products with the expectation that the stated daily performance objectives will be met over the long term as well. The agencies warn, however, that investors should be aware that the performance of these ETFs over a period longer than one day can differ significantly from their stated daily performance objectives.

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