Subject: File No. S7-24-15
From: Rafael Velasquez

January 30, 2020

As someone who has worked in the investment industry in various capacities including as a Risk Manager for billions of assets for both Hedge Fund portfolios and institutions such as endowments and pensions I strongly believe in the benefit of leveraged ETFs.

Leveraged ETFs are the easiest and cheapest way for small investors to be able to diversify their portfolio with low volatility assets that are uncorrelated with equity risk, most importantly fixed income.

Without the use of leverage it is impossible to obtain a portfolio that has both substantial diversification and enough portfolio risk to offer an adequate level of return.

Making it harder to obtain leveraged fixed income exposure would just force investors to take more equity risk than an efficient portfolio would have in order to maintain an adequate level of volatility.

Moreover investors seeking to simply take more risk will just move out on the risk curve to unlevered but very high beta securities such as small or micro caps that in all likelihood will be much riskier than the levered ETF they would have bought otherwise.

I believe this is a well intentioned but negative proposal that will have severe unintended consequences and prevent investors from efficiently building diversified risk parity style portfolios.