The ETF Volatility Equation

In September we hosted a webinar on the Fundamentals of ETFs with Eric Pollackov from Charles Schwab and Laura Morrison from the NYSE’s ETF group. The timing seems to have been very good given the onslaught of media attention to ETF trading and the possible effects on underlying stocks. With volatility through the roof lately, everyone is looking for something or someone to blame and ETFs, particularly leveraged ETFs, have been an easy target.

A leveraged exchange traded fund uses derivatives to amplify returns. Designed for investors with very high risk appetites, these ETFs aim to provide returns of double or triple the returns of the underlying index (the losses are also magnified). 

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