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BlackRock head Larry Fink says leveraged ETFs threaten the market’s structural stability and could “blow up” the funds industry, Bloomberg reports.

Fink says BlackRock would never sell a leveraged ETF and he doesn’t think the U.S. Securities and Exchange Commission should let them exist.

Read: Different ways to construct ETF portfolios

Traditional ETFs track indexes and offer lower fees than mutual funds because they require less portfolio oversight. As they’ve gained in popularity, firms have introduced more complicated versions, including products with leverage. Fink says these should be more closely supervised.

He’s not the only one with concerns about complicated ETFs, reports Bloomberg. The International Monetary Fund says that European ETFs with derivatives complicate the market and add risk.

BlackRock is lobbying for regulators to create categories of ETFs with clear labeling and risk profiles.

Read more here.

Also read:

Horizons launches swap-based bond ETF

4 rules for good credit advice

Safety measures for swap-based ETFs

Originally published on Advisor.ca

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