Summary by Bloomberg AI
- Bill Ackman criticized the use of highly-leveraged exchange-traded funds and zero-day stock contracts, questioning their contribution to society and the economy.
- Levered funds, which allow investors to magnify their exposure to an underlying asset or index, command around $100 billion and have been popular among day traders.
- Ackman warned that the overuse of leverage could be a danger to the health of financial markets, driving dramatic market moves and making markets increasingly unreliable as short-term indicators of policy changes.
By Vildana Hajric and Katie Greifeld
04/11/2025 08:03:22 [BN]
(Bloomberg) — Bill Ackman is taking aim at two booming markets beloved by day traders: Highly-leveraged exchange-traded funds and zero-day stock contracts that have become one of the hottest options strategies on Wall Street.
In a series of posts on X, the billionaire investor and founder of Pershing Square Capital Management criticized the heavy use of leverage in markets, asking his 1.7 million followers: “How have 3X leveraged ETFs and Zero Days to Expiration (0DTE) options advanced society or contributed to our economy?”
Bill Ackman
Levered funds, which allow investors to magnify their exposure to an underlying asset or index and are typically meant for short-term trading, command around $100 billion, according to data compiled by Bloomberg. They have been a favorite among market participants hoping to profit from the recent wild gyrations in stocks: A triple-levered tech fund that trades under the ticker TQQQ, for instance, has taken in more than $2.3 billion this week through Thursday, putting it on track for the biggest weekly inflow in its 15-year history.
So-called zero-day options — which are contracts that expire within 24 hours — have also exploded in popularity, with some investors saying they can exacerbate volatility in broader equity markets.