Direxion is best known as the issuer that introduced investors to 3x leveraged ETFs, but the Boston-based firm has built out its offering of 2x leveraged funds in 2010. The expansion of that portion of Direxion’s product line continued today with the launch of four new leveraged ETFs, bring the company’s total leveraged ETF count to 38. The new ETFs launching today are:
- Daily Retail Bull 2x Shares (RETL)
- Daily Retail Bear 2x Shares (RETS)
- Daily Natural Gas Related Bull 2x Shares (FCGL)
- Daily Natural Gas Related Bear 2x Shares (FCGS)
“As Direxion grows, we remain focused on helping investors achieve their goals through the use of tactical portfolio strategies on the long and short end,” said Dan O’Neill, Direxion Shares’ President in a press release. “We look forward to continuing to expand our lineup of multi-directional, leveraged funds as new opportunities arise.”
RETL will seek daily returns equal to 200% of the daily performance of the Russell 1000 RGS Retail Index, a benchmark measuring the performance of the retail sector of the economy. At this point in the recovery, investors have been paying very close attention to the retail sector as an indication of the health of the economy, especially around the release of monthly statistical bulletins focusing on the sector.
Currently, there are a number of single beta ETFs offering exposure to the retail sector, including the SPDR S&P Retail (XRT), Retail HOLDRS (RTH), and PowerShares Dynamic Retail (PMR). In aggregate, these three ETFs have assets of nearly $1.3 billion and average daily volume of nearly 20 million shares, suggesting that significant interest in this sector exists [also see ETF Plays For A Retail Recovery].
RETS will seek to deliver daily returns equal to -200% of the daily change in the same index.
Natural Gas Funds
FCGL will offer 2x daily leveraged exposure to the ISE-Revere Natural Gas Index, a benchmark that includes companies that derive substantial portions of their revenues from the exploration and production of natural gas.If that ticker looks familiar, that may be because First Trust currently offers an ISE-Revere Natural Gas ETF under the ticker FCG. That fund has more than $350 million in assets and trades nearly 900,000 shares daily, indicating that investors have embraced the idea of achieving exposure to natural gas through equities that derive revenues from the commodity.
Investors have also paid close attention to natural gas markets in recent months, evaluating demand for the fuel as an indication of the strength of the recovery in the U.S. Many investors achieve exposure to natural gas through futures-based products such as UNG and GAZ. But frustrations with the nuances of a futures-based strategy–including the potentially devastating impact of contango–have led many to seek out alternative means of establishing exposure. Expect the new leveraged natural gas ETFs to be particularly active on Thursdays when the weekly inventory reports are released [see Thursdays With UNG].
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Disclosure: No positions at time of writing.