Jonathan Steinberg, chief executive of WisdomTree Investments, dismissed the recent bad press surrounding leveraged exchange traded funds as analysts look for something to blame for the recent bout of market volatility.
Steinberg remarked that leveraged and inverse ETFs are getting a “bad rap” at the Barclays Capital conference on Monday, reports Jessica Toonkel for Reuters. WisdomTree has $13 billion in assets under management and is the eighth largest ETF provider in the U.S. [WisdomTree Lists Stock on Nasdaq]
“The rap for them [leveraged and inverse ETFs]is that they don’t deliver the long-term tracking of the index, but they never said they would,” Steinberg commented. “The other knock is that they have contributed to the volatility.” [Leveraged Funds: Tail Not Wagging the Dog, ETF Analyst Says]
Last week, leveraged ETFs came under fire following a report the Securities and Exchange Commission is looking into whether leveraged ETFs exacerbated the recent market volatility. [Do Leveraged ETFs Really Exacerbate Volatility?]
While WisdomTree does not offer its own line of leveraged ETFs, Steinberg believes that they are a “very tactical trade.” [Myth-Busting Leveraged ETFs]
“I have been on the road meeting hundreds and hundreds of advisors and investors and there is a very passionate and narrow universe for leveraged and inverse ETFs,” Steinberg said.
“People are looking for a scapegoat for the volatility,” Steinberg added in a separate Reuters story published Wednesday.
Laurence Fink, CEO of iShares ETF manager BlackRock, said leveraged ETFs are “toxic,” according to the report.
Max Chen contributed to this article.
For more information on leveraged funds, visit our leveraged ETFs category.