FTfm has been talking about the technicalities of more abstruse exchange traded funds for a while, so it’s nice to see a lively debate going on across the blogosphere. Leveraged and inverse ETFs come in for a good spanking in particular.
While the good folks of IndexUniverse, Abnormal Returns and Seeking Alpha make some excellent points, it is important to bear in mind that the problems are mostly not with the plain vanilla ETFs most investors are using. It would be a pity if the move to low-cost passive investment were deterred by the problems of a few foolish investors in products they had failed to understand.
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