Direxion Fills Up Leveraged ETF Pipeline

by on November 11, 2011 | ETFs Mentioned:

Direxion laid the groundwork for several new products in a recent SEC proposal, including a handful of sector ETFs as well as an international equity offering. The Boston based issuer detailed plans to potentially ramp up its product lineup with four new 3x leveraged bull-bear pair ETFs. Triple-exposure products are the bread and butter of Direxion, which was the first firm to specialize in the leveraged and inverse corners of the exchange-traded universe back in 2008.

In a recent SEC Filing, Direxion filed a proposal for eight new funds, focusing on the industrials sector along with gold and silver miners. The filing also included plans for Direxion to expand the geographic scope of its current product lineup with a proposed bull-bear pair of international ETFs offering exposure to Turkey.

The proposed funds are listed below and all are expected to feature annual expense fees of 0.95%:

  • Direxion Daily Turkey Bull 3X Shares: This ETF will seek to deliver 300% of the performance of the MSCI Turkey Investable Market Index.
  • Direxion Daily Turkey Bear 3X Shares: This fund is designed to deliver -300% of the performance of the above mentioned index.
  • Direxion Daily Industrial Bull 3X Shares: This ETF will seek to deliver 300% of the performance of the Industrial Select Sector Index.
  • Direxion Daily Industrial Bear 3X Shares: This fund is designed to deliver -300% of the performance of the above mentioned index.
  • Direxion Daily Junior Gold Miners Index Bull 3X Shares: This ETF will seek to deliver 300% of the performance of the Market Vectors Junior Gold Miners Index.
  • Direxion Daily Junior Gold Miners Index Bear 3X Share:- This fund is designed to deliver -300% of the performance of the above mentioned index.
    Direxion Daily Silver Miners Bull 3X Shares
    : This ETF will seek to deliver 300% of the performance of the Solactive Global Silver Miners Index.
  • Direxion Daily Silver Miners Bear 3X Shares: This fund is designed to deliver -300% of the performance of the above mentioned index.

All of the proposed funds will rebalance and reset exposure on a daily basis. The SEC filing clearly outlines the risks associated with leveraged products and goes onto state that for a period longer than one day, the pursuit of each of the funds triple-exposure may result in daily leveraged compounding.

Same Exposure, No Leverage

At present, the vast ETF universe includes non-leveraged options for investors looking to access any of the above mentioned underlying benchmarks. Those who are eager to dip their toes in the booming Turkish economy need look no further than the iShares MSCI Turkey Investable Market Index Fund (TUR), which offers exposure to 100 securities, with a tilt towards financial service equities [see Turkey ETF Looks Delicious].

Investors looking to access non-leveraged versions of Direxion’s proposed bull-bear sector funds are also in luck. The ultra-popular State Street Industrial Select Sector SPDR (XLI) offers exposure to a basket of 60 U.S. equities from the industrial sector, while the Van Eck Market Vectors Junior Gold Miners ETF (GDXJ) tracks the performance of roughly 80 small and mid cap miners. Investors who wish to access a non-leveraged version of the Solactive Global Silver Miners Index can turn to Global X and their Silver Miners ETF (SIL).

Disclosure: No positions at time of writing.