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Posted by on Aug 7, 2009 in AdvisorShares, Investment Perspective

Leverage and Inverse ETFs Under Siege

It is disappointing to see all of the restrictions place on leverage and inverse ETFs.  These exact same strategies have been available in a mutual fund structure for 15 years.  It seems what was a good opportunity by FINRA to remind member firms of the risks associated with these products has turned into something I don’t think anyone in the industry would have imagined.

It seems a slippery slope for broker-dealers, what if they FINRA reminds brokers of the risks of penny stocks, or micro caps, small caps, or possibly emerging market securities.  And now that some broker-dealer have set a precedence on restricting a security deemed “too risky” does that put an obligation on the broker-dealer to do this across the board for all securities??

Education is usually the best solution to help manage misconceptions.

The AlphaBaskets blog provides frequent market insight and commentary by AdvisorShares Investments, LLC, created by AdvisorShares and other leading active managers.  AdvisorShares Investments is an SEC-registered investment adviser and the investment adviser to the AdvisorShares actively managed ETFs. The views expressed on AlphaBaskets should not be taken as investment advice or a recommendation for any of the actively managed ETFs advised by AdvisorShares.