Senior officials from the top US markets regulator have warned of the risks of single-stock leveraged exchange traded funds, speaking out ahead of the products’ imminent launch.
Lori Schock, director of the Securities and Exchange Commission’s office of investor education and advocacy, said the new products were even riskier than existing leveraged and inverse ETFs, which provide daily amplified losses and gains on the securities they track and which the SEC has already warned against.
Schock said in a statement on Monday evening that in addition to the risks posed by other leveraged products, the single-stock versions also lacked the benefits of diversification.