Earlier this week, we reported that NASAA, an organization consisting of state securities regulators, listed leveraged and inverse ETFs as the top investment trap for retail investors.
According to Investment News, the concerns are specific to leveraged and inverse ETFs, not ETFs that track mainstream stock indexes. Leveraged ETFs are designed to return a multiple of the daily performance of the stock index they track. Inverse ETFs are designed to profit from a decline in the underlying index or benchmark (i.e. similar to options trading). These are short-term investment vehicles and Investment News reported that state regulators are concerned that these high-risk investments are being inappropriately sold to “buy and hold” investors. Investors who sustained losses likely have legal claims against the financial advisors and their firms and may be able to recover some or all of the losses.
If you believe that you lost money in leveraged and inverse ETFs as a result of bad financial advice, feel free to contact us for a free consultation.