The goal of regulators is to protect the public from potentially dangerous investment tools. But the recent warning may have confused many investors that use ETFs and find them to be a valuable tool within their portfolio. [ETF Usage Will Double by 2012.]
Jaffe proposes that there could be a need for a smaller disclosure statement available for investors when they are buying leveraged or inverse ETFs. Regardless, the investment world is dictated by “caveat emptor,” where an investor is assumed intelligent enough to read and understand the prospectus.
In other words, investors should always understand what they’re buying, whether it’s a stock, bond, mutual fund or ETF. If one needs a reminder, then there may be bigger issues to consider.
Tisha Guerrero contributed to this article.
