Mar. 18, 2020
Comment on SEC Proposed Rule #S7-24-15: I'm an investor and write a column on investing for Seeking Alpha. One of my areas of interest is leveraged risk parity and other similar strategies. One of the great things about leveraged ETFs is that they provide diversification and leverage at the same time, which gives a higher return for each unit of risk. As such, their volatility and return numbers tend to compare favorably to other portfolio strategies, which concentrate risk. I'm in favor of increasing regulation on inverse ETFs, but basic leveraged ETFs on broad indices such as UPRO, SSO, and TQQQ are safe and effective products and don't deserve. Putting your entire portfolio into one of these products is risky, but putting your entire portfolio in Tesla or Amazon is also risky, and likely even more so. I think the key to successful regulation is that highly liquid products on broad-based indices should be lightly regulated, where products that are less broad-based or inverse of indices could be screened to ensure that customers understand the risks. Finally, I would note that long-leveraged ETFs have created wealth for investors over time and are likely to continue to do so. Regards, Logan Kane