With a name like VegaShares, it’s all too easy to roll the dice.

A hopeful ETF issuer is trying its luck with the SEC, last week filing with the regulator for 16 funds that would use 3X or 4X leverage on a variety of large exchange-traded funds from other firms. A few months ago, that would hardly have been news, as at least nine other companies made a blitz of filings for 3X and 5X ETFs, many of which focused on single securities or assets. What stands out, though, is that the Securities and Exchange Commission sent warning letters to those nine issuers, including Direxion, GraniteShares and ProShares, that previously filed for the highly-leveraged funds. In short, any such products would violate a rule that limits leverage, and it’s unclear how any of the firms hoping to launch the funds would get around that.

“The timing of the filings is perplexing because the issuers seem oblivious to the SEC’s clear messaging that leverage beyond 200% is incompatible with Rule 18f-4, absent exemptive relief,” said Bill Singer, a veteran Wall Street regulatory lawyer. “Of course, given that these products sort of border the line between investing and gambling, it may be that the issuers are pursuing one of several gambits.”

ETF Roulette

Those gambits could be regulatory brinkmanship, a bet on a lack of potency at the SEC or an assumption that the regulator is amenable to some creative math that would allow for leverage beyond 200%, Singer said. “Whichever of those three routes is pursued, the investing public is still left with a somewhat sordid bit of regulatory arbitrage dressed up as new-product development.”

To be clear, the investment advisor behind VegaShares ETFs is Vega Capital Partners. “Vegas” isn’t part of the name. The company, which does not appear to have any existing ETFs, declined to comment. VegaShares, like others pursuing the highly leveraged funds, discloses in the prospectuses that the ETFs should not be used by anyone other than sophisticated investors who understand the risks.

Here’s a look at the ETFs for which it filed initial prospectuses:

• There are five funds seeking 3X exposure to the Vanguard Total World Stock Index Fund ETF (VT), Vanguard Total Stock Market Index Fund ETF (VTI), Roundhill Magnificent Seven ETF (MAGS), VanEck Gold Miners ETF (GDX) and VanEck Junior Gold Miners ETF (GDXJ).
• There are 11 funds seeking 4X exposure to QQQ, the iShares Semiconductor ETF, SPY, iShares 20+ Year Treasury Bond ETF (TLT), MAGS, State Street Technology Select Sector SPDR ETF (XLK), iShares Russell 2000 ETF (IWM), GDX, GDXJ, State Street Financial Select Sector SPDR ETF (XLF) and iShares China Large-Cap ETF (FXI).

For a Limited Time Only: The filing from VegaShares raises the same issue as prior ones from other firms, which is the potential for the SEC to allow these highly leveraged strategies, Singer noted. If ETFs that violate 18f-4 are allowed to launch, that foretells other regulatory dominos possibly falling, Singer said. “When all is said and done, this is not so much an ETF novelty story as a critical stress test of the SEC’s willingness to enforce its own derivatives rule in the face of industry pressure.”

ESG may be the most controversial acronym in finance, but don’t tell that to ETF investors.

Environmental, social and governance exchange-traded funds reached a new milestone, with global assets climbing to $799 billion through the end of November, according to ETFGI data. The category pulled in $5.7 billion in November alone, bringing year-to-date inflows to almost $49 billion, a 25% increase over the prior year. But it also comes at a pivotal time, as asset managers continue to downplay ESG labels and critics on Capitol Hill have accused fund managers of everything from political bias to regulatory overreach.

The resurgence of ESG funds could also become a savvy play for financial advisors looking to attract younger, more sustainability-minded clients. “Political winds are fickle, but long-term investors recognize reality,” said Max Kulyk, founder of the fee-only planning firm Chicory Wealth. “Criticism from lawmakers has only turned up the volume.”

ESG’s MVPs

Last year’s sales tally ranked sixth-highest on record, though it trailed years during ESG’s heyday: Inflows peaked at $147 billion in 2021. Broad strategies attracted the bulk of assets, but investors also directed money toward clean energy, green bonds and transition-focused funds. “What we are actually seeing is the ‘weeding out’ of products that were never truly impact investments to begin with,” Kulyk said. “Products [got] slapped with an ‘ESG’ label during the boom a few years back, opaquely structured as ETFs or mutual funds, with no transparency into the environmental or societal impact of the companies within them.”

The data also show:

• BlackRock remains the undisputed heavyweight, managing $269 billion and controlling 33.7% of the global market.
• Amundi ETF follows with just shy of $109 billion, while UBS ETFs manages $55 billion.
• The top three hold more than half the world’s ESG assets inside the wrapper.

“Under the current political climate, ESG as a label has come under attack,” said Kristin Hull, founder of Nia Impact Capital. “Yet, business concerns about the material aspects of the environment, human capital and governance are more pertinent than ever.”

It’s Not Easy Being Green. One of the longstanding issues has been finding a standardized criteria for ESG products. That still seems to be the case with 56% of adopters saying there is a lack of clarity around what the strategy actually means, according to a survey cited in the data. Younger generations, like millennials and Gen Z, are especially motivated by sustainability and are choosing financial advisors based on it, Hull said. “As the Great Wealth Transfer takes place, women and younger investors see climate as a key risk factor and want their money aligned with the economy they want to see.”

Wall Street’s exchange-traded fund factory has spent the year testing how much it can push boundaries, but some ideas proved a step too far.

With more than $1.4 trillion flowing into ETFs last year, issuers have rolled out products that dial up leverage and chase mouth-watering yields. Connecticut-based Tuttle Capital Management recently pitched an ETF built around a provocative premise: that political influence itself can be an investable signal. The firm’s proposed Government Grift ETF, with the proposed ticker GRFT, aims to invest in companies perceived to benefit from their proximity to Washington decision-makers, from cabinet officials to members of Congress whose stock trades attract scrutiny. The problem? No one will list it.

“I think ‘grift’ implies that people are doing something wrong,” Tuttle Capital CEO Matt Tuttle recently told Bloomberg. “[T]he investment philosophy is awesome. We are looking for unusual congressional trades.”

Subversion Explosion

Every major US exchange, including the New York Stock Exchange, Nasdaq and Cboe Global Markets, declined to offer the fund, according to Bloomberg. GRFT’s registration became effective with the Securities and Exchange Commission in the fourth quarter of 2025, but without getting listed on the exchanges, investors can’t buy and sell it.

GRFT’s snub is notable, given how permissive the regulatory landscape has been. Leveraged single-stock ETFs, crypto-linked funds and strategies tied to ultra-short-term options exploded last year, benefiting from a regulatory posture that loosened during the second Trump administration. Tuttle himself has been a regular contributor to that trend, filing for leveraged funds tied to Bitcoin and mega-cap tech names.

Rejection’s Sting. Tuttle’s product isn’t the only one that tracks policymakers, either. Two ETFs managed by Tidal Financial, the Unusual Whales Subversive Democratic Trading ETF (NANC) and its Republican counterpart (GOP), track securities bought by Democratic and Republican members of Congress, respectively.

“It’s using the ETF wrapper to unpack how our members of Congress are investing their money [and] what patterns exist across these funds,” Tidal co-portfolio manager Dan Weiskopf told ETF Upside at an industry event last year. “It’s disclosing that [the lawmakers are] mostly invested in large caps, yet they’re elected by a lot of people who are working in small companies. There’s a certain level of irony to them.”