Leveraged ETFs and inverse ETFs give individual investors reliable tools with which to hedge against market downturns. The leverage on the short side for inverse ETFs allows them to hold a smaller position against existing longer-term holdings as a hedge in the same manner that professionals use futures to achieve the same goal. On the long side, they allow investors to participate in market upside, e.g., bull markets, in a manner that avoid headline risk with individual stocks. These ETFs should remain accessible to individual investors who may not have the resources, access, or knowledge to trade futures. ETFs should remain accessible
Gil Morales Comment On Regulatory Notice 22-08
Leveraged ETFs and inverse ETFs give individual investors reliable tools with which to hedge against market downturns. The leverage on the short side for inverse ETFs allows them to hold a smaller position against existing longer-term holdings as a hedge in the same manner that professionals use futures to achieve the same goal. On the long side, they allow investors to participate in market upside, e.g., bull markets, in a manner that avoid headline risk with individual stocks. These ETFs should remain accessible to individual investors who may not have the resources, access, or knowledge to trade futures. ETFs should remain accessible