With the controversy over leveraged exchange traded funds (ETFs), many have fled the market and it is difficult to tell exactly how many retailer investors hold them.
Leveraged ETFs have been designed for short-term traders who want to maximize the movements of certain market sectors, hedge positions and short the markets. They are great tools that work exactly as they should for those who are educated and understand how they operate and what they’re for.
Leveraged ETFs are now getting a bad rap because some people who didn’t understand them used them and got burned in the process.
A recent regulatory filing indicated that 24% of ProShares UltraShort 20+Year Treasury (TBT), 11% of ProShares UltraShort S&P 500 (SDS) and about 9.7% of ProShares Ultra Financials (UYG) were owned by institutions, reports Daisy Maxey of The Wall Street Journal.
Does this mean that the remainder are owned by retail investors? According to ProShares LLC, these numbers are distorted because it doesn’t reflect institutional investors who don’t have to file a 13F with the Securities and Exchange Commission (SEC).