As sales of ETFs boom, the SEC’s Office of Investor Education and Advocacy has released an investor bulletin on the investment vehicle. The bulletin highlights the view that not all ETFs are created equal.
“Certain ETFs can be relatively easy to understand. Other ETFs may have unusual investment objectives or use complex investment strategies that may be more difficult to understand and fit into an investor’s investment portfolio,” the bulletin says. “For example, leveraged ETFs seek to achieve performance equal to a multiple of an index after fees and expenses. These ETFs seek to achieve their investment objective on a daily basis only, potentially making them unsuitable for long-term investors.”