SEC Warns Investors About Risks Of ETFs

Law360, New York (August 13, 2012, 6:44 PM EDT) -- The U.S. Securities and Exchange Commission on Monday cautioned investors to thoroughly research exchange-traded funds before investing in the often complex financial products.

In a bulletin, the agency advised investors to make sure they understand the risks and costs of a particular ETF. Created during the 1990s, ETFs have become increasingly popular and now hold about $1.2 trillion worldwide, according to the SEC.

“Do not invest in something that you do not understand,” the SEC wrote in its investor bulletin. “If you cannot explain the investment...
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