Indexor

The Debate On Levered / Inverse ETFs

Poor Bogle is still stuck with an 80's mindset. The investment world has simply passed him by. Keep putting any new strategy out there and if it has merit it will attract assets. If there are enough investors to make a 300% market exposure ETF profitable, then knock yourself out and get it to market. If someone loses their entire portfolio value from such an issue, they will learn a very important and costly lesson. If the bull market returns and assets drain out of such an issue to the point it is unprofitable to run, it will close down.

So far, we've watched two providers close down fixed income ETFs because they couldn't find enough traction. And several issues from Claymore (a questionable provider in its own right) that also were unable to attract sufficient assets, have also folded the tent.

Such closures (and fund "mergers") have occured in the open-end mutual fund market for decades. Even Fidelity's Magellan had other loser funds merged into it over the years. That's what capitalism is all about. Let anyone with an idea bring it to market and see if it will stick. ETFs have leveled the playing field between institutional and individual investors, while leveraged/inverse funds have done the same thing to Hedge funds, without the 2 and 20 cost structure.