September 8, 2014 Comments (0) Blog, Securities Fraud

Triple Leveraged Inverse ETF's

(Last Updated On: July 17, 2015)

Have you suffered losses investing in a leveraged or inverse ETF’s such as a Direxion triple leveraged inverse ETF? If so, the White Law Group may be able to help recover your losses.

Exchange-traded funds (ETF) are registered investment companies whose shares are comprised of a portfolio of securities, often described as a “basket.” They are designed to mirror the performance of the underlying index such as the S&P. ETF’s trade just like a stock and their value can fluctuate throughout the day. Traditional ETF’s are often compared to mutual funds to appeal to investors. The same cannot be said about leveraged and inverse ETF’s.

Leveraged ETF’s aim to produce returns in multiples. Their daily performance objectives attempt to deliver two or more times the returns of the underlying index. Inverse ETF’s, like the name implies, seek to deliver returns the opposite of the performance of the index they track.

Many investors are unaware that the risks associated with leveraged and inverse ETF’s are often considerably greater compared to normal ETF’s. These types of investments reset daily and are not designed to be held for an extended length of time. In addition, inverse and leveraged ETF’s should be monitored daily.

In order to meet their objectives, leveraged and inverse ETF’s use a number of investment strategies, such as swaps, futures contracts and other derivative instruments, to meet their objectives. Unfortunately the complexities associated with these product, are not only misunderstood by many investors, but the brokers that sell them.

Brokers have a responsibility to perform adequate due diligence in order to determine suitable investment recommendations. Recommendations should be inline with the clients risk tolerance, investment objectives, liquidity needs and investment experience. Brokers that make unsuitable investment recommendations may be liable for investment losses.

If you invested in an leveraged or inverse ETF’s, like those offered by Direxion, and would like to speak to a securities attorney about your potential to recover your investment through FINRA arbitration, please call our Chicago office at (312)238-9650 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Vero Beach, Florida.

For more information on The White Law Group, please visit our website at www.whitesecuritieslaw.com.

 

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