The Investment Industry Regulatory Organization of Canada (IIROC) notice, dealing with leveraged and inverse ETFs, points out that these sorts of ETFs are increasingly popular, and while they may be useful in some sophisticated trading strategies, it cautions that they may not be appropriate for many retail investors.
IIROC states, "They are highly complex financial instruments that are typically designed to achieve their stated objectives on a daily basis. Due to the effects of compounding, their performance over longer periods of time can differ significantly from their stated daily objective. Therefore, leveraged and inverse ETFs that are reset daily typically are unsuitable for retail investors who plan to hold them for longer than one trading session, particularly in volatile markets."
Source: IIROC, http://www.iiroc.ca
Leveraged ETF Warning
The Investment Industry Regulatory Organization of Canada (IIROC) notice, dealing with leveraged and inverse ETFs, points out that these sorts of ETFs are increasingly popular, and while they may be useful in some sophisticated trading strategies, it cautions that they may not be appropriate for many retail investors.
IIROC states, "They are highly complex financial instruments that are typically designed to achieve their stated objectives on a daily basis. Due to the effects of compounding, their performance over longer periods of time can differ significantly from their stated daily objective. Therefore, leveraged and inverse ETFs that are reset daily typically are unsuitable for retail investors who plan to hold them for longer than one trading session, particularly in volatile markets."
Source: IIROC, http://www.iiroc.ca