There are already a number of leveraged and inverse 3x or 300% U.S.-listed ETF options on the market. The proposed ForceShares ETFs will be the first to provide leveraged and inverse exposure of 4x or 400% to market moves.
“We’re excited about it,” Sam Masucci, chief executive officer at Exchange Traded Managers Group LLC, which is distributing the product, told Reuters, adding that the product is “not going to be for everybody. But for those people that are looking for the leveraged exposure to the S&P and they’re not looking to do it by way of a futures product here you have a publicly listed security.”
The green-light for the 4x funds come at a difficult juncture for sponsors of more exotic derivatives-based ETFs. The SEC presented draft rules last year that would have restricted the use of derivatives, which was interpreted as a way to diminish fund managers’ ability to keep highly leveraged products, notably 3x ETFs, on the market.
However, under the President Donald Trump administration, which has taken a more hands-off approach to regulation, observers expect lessening controls over more restrictive regulatory measures. For instance, the U.S. Senate voted to confirm attorney Jay Clayton to head the SEC, a change in leadership that switch the course by which the agency approves investment products coming to market.
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