Massachusetts Secretary of State William F. Galvin is investigating the sales materials of fund companies that sell leveraged exchange-traded funds, The Boston Globe reports.
The state has sent letters to three of the leaders in the space,
“These are highly volatile instruments,” Galvin said. “We want to make sure that if they are sold to average investors, they are told there is risk here. This is not a save-and-hold investment.”
Specifically, Galvin is investigating whether leveraged ETFs should be sold with detailed warnings about the funds’ ability to double or triple losses. He is also concerned that there are 140 leveraged ETFs on the market with $33 billion in assets.
Late last month, the
But the companies at the heart of the probes defend both their approach and marketing strategies, saying they are complying with current regulations.