An Investment News survey has uncovered skepticism on the part of advisors when it comes to leveraged exchange traded funds (ETFs).

The survey of more than 1,100 advisors found that of the 764 who expressed an opinion, 38.3% had a somewhat negative or very negative view of them. Another 29% of advisors had a very or somewhat positive view of them, while 32.7% were neutral.

The results certainly don’t align with the success of leveraged fund providers ProShares and Direxion, says David Hoffman for Invesment News.

Some advisors question whether this success is sustainable, while others noted the daily compounding in these funds an a lack of education are issues. But if advisors do take the time to understand how they work, they might have a less negative opinion of these funds.

Among other findings in the survey:

  • 32.8% of advisors had a somewhat or very positive view of actively managed ETFs. A very or somewhat negative view was held by 24.8% of advisors, and 42.4% were neutral. This could be because advisors are used to dealing with actively managed mutual funds, so they’re not a foreign tool.
  • 38.1% of providers prefer Barclays, followed by Vanguard (16.6%), ProShares (11%), PowerShares (8.6%) and State Street (8.4%).
  • 62% of advisors plan on recommending ETFs in the future.
  • 62.8% said ETFs are a complement to mutual funds instead of a threat.
  • 75.6% of advisors are recommending ETFs, and 61.9% are recommending ETFs more than they did one year ago.
  • As for why they’re recommending them more, 81.5% said it was because ETFs are transparent, generally cheaper and can be traded all day.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. 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.