“We want to make sure that ETF investors understand exactly what they own,” Darek Wojnar, managing director at iShares, said Monday in a panel discussion at the conference.
More recently, industry officials have been pondering a new system that would restrict the sale of complex ETFs to sophisticated traders. Some want brokerages to act as “gatekeepers” that limit trading to those who acknowledge their aptitude for holding such investment instruments while others contend that complex ETFs should be restricted to institutional or professional traders. Since fund providers can’t come ton an agreement, regulators may eventually be forced to step in.
Leveraged and inverse ETFs try to achieve their target performances on a daily basis through daily rebalancing, usually at the end of the day. Due to compounding issues from daily rebalancing, the funds won’t necessarily reflect their intend 2x, 3x or inverse targets over a long period of time. As such, leveraged/inverse ETFs are intended for short-term hedging or allocation purposes. [Leveraged and Inverse ETFs: What You Should Know]
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.