Did your Broker Recommend investing in ProShares Ultra 20+ Year Treasury (UBT)? 

ProShares Ultra 20+ Year Treasury (UBT) is a leveraged bond that offers 2x long leveraged exposure to the broad-based Barclays Capital U.S. 20+ Year Treasury Index. 

An investment in leveraged debt can be a very risky one, as there are numerous factors that can converge to drastically change the returns of these products, according to its prospectus.  

Investing in leveraged bond ETFs requires a careful understanding of the specific economy, in this case the US, and what kind of policies and regulations are currently in place and are set to be enforced in the future. The prospectus claims that TMF can be a “powerful tool for sophisticated investors,” but should be avoided by those with a low risk tolerance or a buy-and-hold strategy. 

Unfortunately for investors, UBT is down –37.80% YTD.  

With a leveraged ETF the fund uses debt and derivatives to increase the returns of the underlying index at a ratio of 2-to-1 or even 3-to-1, instead of 1-to-1 like a regular ETF. The financial derivatives and debt used in these funds may amplify the risks, even as they have the potential to produce high gains. Leveraged ETFs also often come with higher expense ratios than regular ETFs. 

While a regular ETF tracking an index could fall 5%, a leveraged ETF would fall 10% or even 15%.  

Potential Lawsuits to Recover Financial Losses 

Fortunately, the Financial Industry Regulatory Authority (FINRA) provides for an arbitration forum for investors to resolve disputes if a broker or brokerage firm makes an?unsuitable investment recommendation?or fails to adequately disclose the risks associated with an investment. It is possible that they could be found liable for investment losses in a FINRA arbitration claim. 

If your financial advisor recommended a purchase in a leveraged bond such as ProShares Ultra 20+ Year Treasury (UBT) and you suffered losses, you may have recovery options. For a free consultation, please call the securities attorneys at the White Law Group at (888) 637-5510.   

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington. For more information, please visit our website, www.whitesecuritieslaw.com.