Vanguard to Ban Individual Investors From Buying Leveraged and Inverse Products

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via WSJ:

Vanguard Group will no longer allow individual investors to make new trades on certain investments that seek to magnify bets, pouring cold water on strategies that became popular after the last financial crisis.

Starting January 22, customers won’t be able to purchase so-called leveraged or inverse products via Vanguard’s brokerage platform, the firm said in a release this past week. That cuts out roughly 400 such securities and funds currently offered on that platform.

The move by the world’s second-largest money manager by assets comes as these complex products gain traction among investors and increased scrutiny from regulators because of the risks involved. Leveraged funds magnify gains–or losses–of an index while inverse products seek to produce the opposite performance of an index.

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