While it is commendable to protect investors from undue risk, it is my belief that leveraged ETFs--with their risks, such as volatility decay, properly understood--can have their place in a well-managed portfolio. I use these products as a small percentage of my portfolio, but believe they serve an important function in helping me control my overall level of leverage while not taking on more risk than I am comfortable with at any given time. Compared with margin and options, I don't believe leveraged funds pose such a risk to uninitiated investors that they warrant being banned or restricted. It is my view that no additional restrictions should be placed on leveraged ETFs, and that individual investors should continue to be able to decide whether the use of these products is appropriate for them.
Elon Hall Comment On Regulatory Notice 22-08
While it is commendable to protect investors from undue risk, it is my belief that leveraged ETFs--with their risks, such as volatility decay, properly understood--can have their place in a well-managed portfolio. I use these products as a small percentage of my portfolio, but believe they serve an important function in helping me control my overall level of leverage while not taking on more risk than I am comfortable with at any given time. Compared with margin and options, I don't believe leveraged funds pose such a risk to uninitiated investors that they warrant being banned or restricted. It is my view that no additional restrictions should be placed on leveraged ETFs, and that individual investors should continue to be able to decide whether the use of these products is appropriate for them.