Direxion Launches 3X Leveraged ETFs

Nov. 11, 2008 3:54 AM ETSPXL, SPXS, TNA, TZA, ERX, ERY, FAS, FAZ, UYG, SKF3 Comments
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Etf Planet

Last week was an historic moment in American history as the United States elected its first African American president, but it was also an historic day for the ETF investing enthusiast.

Shortly after the ballots were counted, and America knew who their next commander-in-chief was going to be, Direxion finally launched their newest investment products, a family of 3X Leveraged ETFs. A lineup that includes both bull and bear strategies for the Russell 1000 and 2000 indexes, and the energy and financial sectors, should grab the attention of traders and investors in the coming weeks and months. With volatility at an all time high recently, the daily returns of these funds should both excite, and scare onlookers.

Here is a rundown of the 3X funds that Direxion now offers:

  • (BGU) – Large Cap Bull 3X Shares – Russell 1000
  • (BGZ) – Large Cap Bear 3X Shares – Russell 1000
  • (TNA) – Small Cap Bull 3X Shares – Russell 2000
  • (TZA) – Small Cap Bear 3X Shares – Russell 2000
  • (ERX) – Energy Bull 3X Shares – Russell 1000 Energy
  • (ERY) – Energy Bear 3X Shares – Russell 1000 Energy
  • (FAS) – Financial Bull 3X Shares – Russell 1000 Financial Services
  • (FAZ) – Financial Bear 3X Shares – Russell 1000 Financial Services

Although trading in these new ETFs is currently light, expect more liquidity in the coming months as more investors and traders become aware of these new funds, much like the launch of the very popular ProShares 2X ETFs. Many of the popular ProShares funds like UYG and SKF were slow at first, but now they turn out a tremendous amount of volume on a daily basis. As for the expense ratios for these new triple return ETFs, they are listed from 94 to 102 basis points, which is fair for 3X leverage. As these funds gain in popularity, I would expect more fund launches in additional sectors.

Disclosure: none

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ETF Planet (http://etfplanet.blogspot.com/) was founded by Jason Neault in 2006 to cover product and market developments related to exchange-traded funds (ETFs). The site covers ETF sponsors, their overall strategies, and any significant developments regarding their products. The site provides news on current and upcoming ETF listings, and aims to educate investors on the details and specifics of these new products.

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