The concept of putting up a little bit of money for a lot of return is an investor's dream. But a new plan that regulators approved Tuesday is generating fears that the dream could become a nightmare.
ForceShares has introduced two new exchange-traded funds that deliver four times the returns, either higher or lower, of S&P 500 futures. The ForceShares Daily 4X US Market Futures
Long Fund and ForceShares Daily 4X US Market Futures Short Fund are designed to return 400 percent of the performance of the index.
While such "leveraged" ETFs are hardly new — a plethora of products offer double or triple up or down movements in various parts of the market — this marks the first time a quadruple fund has been launched.
Some market participants worry that the temptation of such outsized returns will be impossible to resist, with dire results possible.
"This is an innovation for people who are going to run the game, sit
Themis officials have been warning about the products for months. In addition to the dangers of causing owners to lose money rapidly, Arnuk worries about the administration of the funds themselves.