Exchange Traded Funds-Trillion Dollar Problem?

Exchange Traded Funds-Trillion Dollar Problem? 150 150 Rex Securities Law

Exchange traded funds may be the next big problem for investors. Recently a large trade in a popular ETF was delayed for a period of time resulting in an inquiry by the SEC, who is taking a look at connections between hedge funds (that often “short ETFs)  and high frequency traders that trade in and out of ETFs as well as ETF trades that don’t settle on time.

US regulators are not the only ones concerned. United Kingdom regulators are conducting their own investigations. These regulators are concerned that delayed trades , trades that don’t settle within the normal time period, could cause volatility and a systemic risk in financial markets.

ETFs are like mutual funds, in that they contain baskets of securities and are designed to give investors exposure to a pool of assets. ETFs, unlike mutual funds trade throughout the day. Originally created to track benchmark indicies like the Standard & Poors 500, the variety and amount of ETFs has grown exponentially to well over a trillion dollars. In contrast to ETFs designed to track well known indexes,  there are many types and some are not so safe, like those designed to provide exposure to commodities and high yield bonds.

Ultimately it is not presently known what effect the ETF trading being investigated has on the typical retail investor, but there is speculation that it could have caused recent turbulence in the market.

One investing guru, John Bogle founder of Vanguard Group recently pointed out that are 2,000 ETFs to pick from making it difficult for investors to pick the right one.  While he thinks they are ok for trading, he does not think they are so great for investors.

If you have questions about the way your brokerage account is being handled or investment losses you have suffered, please do not hesitate to contact us.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

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