U.S. regulators are getting more serious about trying to regulate "complex products." If you like to trade options, leveraged and inverse ETFs, or even ETF crypto futures, U.S. regulators want you to know they are concerned. The Financial Industry Regulatory Authority (FINRA), which is the regulator for all the brokerage firms and exchanges in the U.S., recently released a Regulatory Notice to its members (brokerage firms), reminding them of the risks of these "complex" products and the legal obligations they have of making sure their investors are in products that are suitable for them. They are indicating they want more regulation around "self-directed platforms" (Robinhood and electronic brokers), and are even hinting they want retail investors to pass a test before they should be able to trade these complex instruments. It's part of SEC Chair Gary Gensler's broad push for more regulation in the financial space.
Join us on ETF Edge this Monday at 1 PM ET when our guests will be Thomas Gorman, attorney with Dorsey Whitney, one of the pre-eminent experts on SEC enforcement, along with Dave Nadig, Financial Futurist at ETF Trends, and Kim Arthur, Managing Director at Main Management. ETFEdge.cnbc.com.
Just when you thought you'd seen every possible ETF under the sun....something comes along that surprises you. We now have a Return On Character ETF (ROCI). It's portfolio that contains only the firms whose CEOs meet certain "character" standards. "ROC Investments has built an actively managed strategy to invest solely on the basis of the character of corporate leadership," the press release says. Top holdings are Apple, Microsoft, Amazon, and UnitedHealth. Not on the list: Meta (Mark Zuckerberg) and Tesla (Elon Musk). Hm.
Interesting story in Investors Business Daily about the possibility that, following recent stock splits by the likes of Amazon, some ETFs may also split their stock.
Gold prices are jumping and gold ETFs are seeing inflows, but pay attention to taxes. A good story on Bloomberg reminds new investors in gold ETFs that they are taxed as collectibles (28%), not as capital gains on stocks (20%).
Good news: fees for active and passively managed mutual funds keep dropping. That's according to a new report from the Investment Company Institute (ICI). In 2021, the average expense ratio of actively managed equity mutual funds was 0.68 percent, down from 1.08 percent in 1996. In 2021, average index equity mutual fund expense ratios were 0.06 percent, compared with 0.27 percent in 1996. Think about this: investors in passive funds save about 60 basis points (0.6%) investing in passive funds vs. active funds. That is a lot of money when compounded over decades. Do the math.
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