This week, BlackRock (NYSE: BLK) CEO Laurence Fink was quoted as saying that leveraged ETFs are a structural problem and have the potential to “blow up” the industry.
BlackRock is the parent company of ETF powerhouse iShares, which does not currently operate any leveraged ETFs. In fact, Fink went so far as to say that BlackRock “would never do a leveraged ETF."
While many industry experts agree that leveraged ETFs are not for the faint of heart, not many have been quoted as saying that they will cause catastrophic effects. They are generally regarded as aggressive investment vehicles for disciplined investors with short-term time horizons.
The use of leverage within an ETF can compound both positive and negative returns ...
More...