As concerns about the use of derivatives in leveraged and actively managed exchange traded funds (ETFs) grow, providers are increasingly nixing the use of them in planned funds.
Van Eck Global is the latest provider to file papers with the Securities and Exchange Commission (SEC) to say it won’t use derivatives in any active ETFs it brings to market. Many other providers have decided to just say no to the use of these performance enhancing devices, Olivier Ludwig for Index Universe reports.
Earlier this year, regulators said they would be looking at the use of derivatives in ETFs to make sure their use was not harming investors.
Van Eck’s filing affects a planned Market Vectors Active Africa ETF as well as a Market Vectors Active Short Municipal ETF, the filing said. The filing may speed up the launch of the funds.
Guggenheim (formerly Claymore) decided it wouldn’t use derivatives in ETFs it was planning. Likewise, AdvisorShares also said it would suspend use of derivatives in a high-yield debt ETF it has in the works.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.