25
Jun
10

las advertencias son ahora mainstream

Las advertencias sobre los ETFs, especialmente los apalancados, se vuelcan ahora en los principales medios; el flash crash ayudo.

Ahora es el turno de The Economist.

ETFs also gained popularity because investors can trade them all day long, whereas a mutual fund can be liquidated only at the beginning and end of the trading day. Retail investors, who are thought to make up half the American ETF market, are probably better off holding on to investments rather than day-trading them. And the “flash crash” on May 6th demonstrated that it is not always easy to exit from ETFs. As liquidity disappeared that day, many ETFs traded down nearly to zero.

The events of May 6th may have been exceptional but a period of market volatility is not. That spells danger for investors in leveraged ETFs, which use debt to magnify the returns of the index they follow. Because these ETFs “reset” on a daily basis, they can easily stray from their targets. If an index worth $100 drops 10% one day and gains 10% the next, it is worth $99, a loss of $1. You might assume that a fund leveraged to deliver twice the returns of this index would be worth $98, a loss of $2. In fact, an ETF of this sort would be worth $80 on the first day and $96 on the second day, for a loss of $4. Whether retail investors understand this is not clear.


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