He is warning that too much money is being borrowed to buy shares. This is happening in ETF funds, as they’re called.
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Bailey thinks too much borrowed money is being used to buy shares through Exchange Traded Funds
One of the points about ETFs is tha tthey are not internally geared. A mutual fund could be, maybe, even often is, buit an ETF isn’t.
And ETFs aren’t necessarily invested in shares. Is this what the guy said or has Spud got hold of the wrong stick again?
Spud has got this wrong based on this quote: “His concern includes the growing use of leveraged exchange-traded funds (ETFs) and momentum-driven strategies” and some measured comments about AI ETFs being more volatile so gains/losses are going to be magnified if you’re in on one of them. AIUI of course.
There are levered ETFs, and it is possible to buy unlevered ETFs on margin. I presume that’s what Bailey’s on about.
I should try hitting refresh first….
One can buy shares, ETFs or other stuff on margin; that’s leveraged. Which is probably what he means, as that is growing with retail investors.
Alternatively (short term use, has a daily reset, should never keep holding it or you get guaranteed compounding loss), there are ETFs that are in effect leveraged even if it’s not the same shape of return as a clean borrow. For example, Nvidia 3x below:
https://www.ajbell.co.uk/market-research/LSE:3NVD
Perhaps because Burn’em and Austin Healey are looking to tax almost every source of income until the pips squeak rather than tackle runaway spending people are looking at funds which might be leveraged , even ETFs to try and get ahead of the game and make themselves some money – at the rate this government, comfortably the worst in global history now is going , a trip to the pub might be an unaffordable luxury by Christmas,
i doubt he knows in reality what an ETF given his own abysmal level of savings.
There are actually a few geared ETFs 2x and 3x daily both long and short. All pretty crap because of how the daily rollover works.
I find this subject interesting. Because it reminds me how pointless so much of the UK economy is. People playing games with imaginary money.