In response to increased regulatory scrutiny of leveraged and inverse exchange traded funds (ETFs), ProFunds has added additional emphasis to its disclaimers about the funds it offers.

Emphasis been added to already-existing disclaimers for ProFunds ETFs, a direct response to regulatory overhaul and heightened attention. Joe Morris of Ignites reports that the firm now warns that the funds’ magnified performance targets are daily, not longer-term. This means that returns will likely rise or fall out of proportion with the underlying index over time, according to the filing with the Securities and Exchange Commission (SEC).

The disclaimer also notes that heightened market volatility can be a factor in the overall benchmark’s performance. It also says that  the funds should be used by knowledgeable investors who seek a daily leveraged investment result, and these investors should understand the potential implications of seeking these results.

State and federal regulators have been increasingly broaching concerns about the appropriateness of these funds for average investors, while providers are working hard to get the message out about their funds so investors can better understand them.

For more stories about leveraged or inverse ETFs, visit our long-short ETF category.

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.

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