Direxion, a leading provider of both 2x and 3x leveraged ETFs, rolled out three new additions to its product line on Wednesday. In addition to a paired offering of 2x leveraged ETFs delivering amplified exposure to gold miners, Direxion also debuted its first non-leveraged product. The Direxion Airline Shares ETF (FLYX) will seek to replicate the NYSE Arca Airline Index, a benchmark designed to measure the performance of highly capitalized and liquid U.S. and international passenger airline companies identified as being in the airline industry, and listed on developed and emerging global market exchanges. Among the largest holdings of the index are US Airways, Delta, and AMR, as well as international companies such as Ryanair and Gol Linhas Aereas Inteligentes SA.
FLYX is the second U.S.-listed ETF to offer exposure to the global airline industry, joining the Guggenheim Airline ETF (FAA). Although the airline business has a tumultuous history–including venturing to the brink of complete collapse on multiple occasions–it has thrived in 2010 as air travel has picked up and corporate spending has resumed. Through November FAA had gained about 35%, making it one of the best performing non-leveraged equity ETFs in the year-to-date period. FAA is linked to a largely similar index as the new Direxion product, and recently had about $39 million in assets. FLYX will undercut the more established airline index from an expense perspective, charging 0.55% compared to FAA’s 0.65%.
Leveraged Plays On Gold Miners
Along with FLYX, Direxion also introduced the first ETFs to offer leveraged exposure to stocks of gold miners. The Daily Gold Miners Bull 2x Shares ETF (NUGT) and Daily Gold Miners Bear 2x Shares ETF (DUST) will offer leveraged daily exposure to the NYSE Arca Gold Miners Index, a benchmark that consists of domestic and international stocks engaged primarily in the mining of gold and silver. This index is also linked to the ultra-popular Market Vectors Gold Miners ETF (GDX), which amassed close to $9 billion in assets. Because the profitability of gold miners depends on the prevailing market price for precious metals, these stocks often trade as leveraged plays on spot prices. The cleverly-named NUGT and DUST could allow for additional leverage on gold prices, and as such could be popular with traders. In their first day of activity, NUGT and DUST both traded close to 200,000 shares, indicating a warm reception from the market. The two funds will charge 95 basis points for expense ratios, par for the course in the leveraged ETF space.
Disclosure: No positions at time of writing.
Correction: A previous version of this story indicated that FLYX tracked the NYSE Arca Global Airline Index. The fund tracks the NYSE Arca Airline Index.