Direxion Brings 3x Leveraged ETFs To Europe

by on March 31, 2010 | ETFs Mentioned:

Direxion, the pioneer of 3x and -3x daily leveraged ETFs in the U.S., is going international. Beginning on March 31, six Direxion Shares Daily ETFs will be listed on the Amsterdam market of NYSE Euronext, significantly expanding the base of investors with access to these products. The Direxion ETFs available on this market include daily 3x and -3x ETFs targeting the MSCI Emerging Markets Index, Russell 1000 Index, and Russell 1000 Financial Services Index:

  • Daily Emerging Markets Bull 3x Shares (EDC)
  • Daily Large Cap Bull 3x Shares (BGU)
  • Daily Financial Bull 3x Shares (FAB)
  • Daily Emerging Markets Bear 3x Shares (EDZ)
  • Daily Large Cap Bear 3x Shares (BGZ)
  • Daily Financial Bear 3x Shares (FAZ)

Each of these products is already listed in the U.S., and all but one of them trade under the same ticker symbol stateside (the 3x bull financial fund is listed as “FAS” in the U.S.).

It’s important to note that this move doesn’t involve the launch of new leveraged ETFs, but rather the cross-listing of existing products on the European exchange. Last week, the SEC announced that it’s looking into whether sufficient investor protections are in place surrounding the use of derivatives by mutual funds and ETFs. As a result, launches of new leveraged ETFs will be halted until the review process is complete.

The listing of six of Direxion’s most popular leveraged ETFs allows the company to test the demand in the European market without making a full-blown entrance into the market. At the end of February, these six ETFs had aggregate assets of more than $3 billion, and the 3x financial ETFs are among the most heavily-traded ETFs. Given the significant concentration of hedge funds and other large and sophisticated investors in Europe, 3x leveraged ETFs could receive a very warm welcome.

Historically, European investors needed a brokerage account opened in the U.S. to access U.S.-listed leveraged ETF products. “Direxion is excited to begin offering our investment solutions in Europe through NYSE Euronext,” stated Dan O’Neill, Direxion Shares’ President. “We see a significant growth opportunity in the European market as demand from hedge funds and active traders increases for sophisticated products that enable tactical, short-term strategies in various market segments.”

Leveraged ETFs are not completely new to the European market. ETF Securities offers a handful of 2x and short 2x leveraged funds, as does Lyxor. But the six Direxion funds represent the first 3x daily leveraged ETFs available in that market.

Disclosure: No positions at time of writing.