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Our experts frequently write blog posts about the findings of the research we are conducting.

Displaying 21-30 out of 151 results for "Leveraged ETF".

Risk and Return in UBS's Willow Fund

(Mar 2014)

In four blog posts we have detailed the fall of UBS's Willow Fund. See Credit Default Swaps on Steroids: UBS's Willow Fund, Willow Fund's Hedging, Investing and Speculating in Distressed Debt With Credit Default Swaps, Further Reckoning of UBS Willow Fund's CDS Losses and UBS Intentionally Misled Willow Fund Investors About its Troubled CDS Portfolio.

The spectacular collapse of the Willow Fund was not the result of general market conditions operating on the Fund's disclosed investment...

UBS Intentionally Misled Willow Fund Investors About its Troubled CDS Portfolio

(Feb 2014)

In three blog posts we explained how the UBS Willow Fund's decision to make a large, highly-leveraged short bet on credit risk contrary to its repeated SEC disclosures caused investors to lose over $200 million between 2007 and 2012 . See Credit Default Swaps on Steroids: UBS's Willow Fund, Willow Fund's Hedging, Investing and Speculating in Distressed Debt With Credit Default Swaps and Further Reckoning of UBS Willow Fund's CDS Losses.

As we demonstrated in our earlier blog posts, the second...

Further Reckoning of UBS Willow Fund's CDS Losses

(Feb 2014)

In previous blog posts we explained how the UBS Willow Fund completed its spectacular multi-year collapse in 2012 largely as a result of its leveraged portfolio of credit default swap (CDS) contracts. See Credit Default Swaps on Steroids: UBS's Willow Fund and Willow Fund's Hedging, Investing and Speculating in Distressed Debt With Credit Default Swaps. Through these CDS contracts, the Willow Fund made a large, highly-leveraged short bet on credit risk contrary to its repeated SEC...

Willow Fund's Hedging, Investing and Speculating in Distressed Debt With Credit Default Swaps

(Jan 2014)

In a recent post we demonstrated how the Willow Fund's purchase of credit default swaps evolved from hedging a portion of its distressed debt to swamping the portfolio with enormous short positions in distressed debt. In this post, we explain why the Willow Fund's use of credit default swaps was inconsistent with its repeated disclosures that:
... The Fund may use a variety of special investment techniques to hedge a portion of its investment portfolio against various risks or other factors...

SEC Examiniation Priorities 2014

(Jan 2014)

The Securities and Exchange Commission (SEC) senior staff recently announced their 2014 examination priorities . The national examination program will be focusing on fraud detection and prevention, corporate governance, and registrants that serve as both a broker-dealer and investment adviser.

SEC staff also plans to undertake initiatives that examine the rollover of retirement vehicles during employment transitions or near retirement. In particular, the staff is concerned about misleading...

FINRA Regulatory Priorities 2014

(Jan 2014)

Early this month, the Financial Industry Regulatory Authority (FINRA) released their 2014 regulatory and examination proirities . FINRA is continuing to focus on the suitability of recommendations made to retail investors. FINRA specifically mentions complex structured products (including leveraged ETFs), non-traded REITs, frontier funds, and interest rate sensitive instruments such as mortgage-backed securities and municipal bonds. At a recent conference, a FINRA representative added that...

SPIVA Scorecard: Persistent Lack of Persistence

(Dec 2013)

Earlier this week, S&P Dow Jones Indices released their semiannual SPIVA Persistence Scorecard, which assesses how consistent top performingactively managed US equity mutual funds have been. This is the third SPIVA release since our blog has been in existence and each time we bring attention to their work. Once again, their results suggest that mutual fund managers only rarely outperform for long.

This year the study found that roughly 7% of funds that were in the top 25% of actively managed...

SEC Scrutinizing Exchange Traded Notes

(Dec 2013)

Risk.net is reporting that the Office of Capital Markets Trends of the Securities and Exchange Commission (SEC) is looking into the details of exchange traded notes (ETNs). The office, headed by Amy Starr, is looking into the fees and the disclosure of risks and formulas used to determine ETN indicative values according to statements made by Starr at the Structured Products conference in Washington, DC on December 10.

ETNs have been a frequent subject on the blog and regulators have issued...

Non-Transparent ETFs and Foreign Stock Funds

(Dec 2013)

Typically, it's better to know more about an investment rather than less. When it comes to mutual funds and exchange-traded funds (ETFs), transparency means knowing what the fund is buying and selling, and therefore the underlying investment strategy.

Some commentators have claimed that fund transparency is a bad thing for investors. If a fund has a predictable investment strategy, then traders can front-run its trades, which may be large enough to move prices. The criticism is even louder...

FINRA Action Against JP Turner for Unsuitable Leveraged ETF Sales

(Dec 2013)

Last Thursday, FINRA ordered JP Turner, an Atlanta-based broker-dealer, to pay restitution related to sales of leveraged and inverse exchange-traded funds (ETFs) and excessive mutual fund switching. The total restitution to 84 customers totaled over $700,000.

Leveraged and inverse ETFs are extremely complex investments, that are designed for professional traders and are generally considered unsuitable for buy-and-hold investors. One fundamental issue with leveraged and inverse ETFs is that...

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