Last week Direxion launched two new daily leveraged funds, the Direxion Daily Travel & Vacation Bull 2X Shares (OOTO ) and the Direxion Daily 5G Communications Bull 2X Shares (TENG ). ETF Trends spoke with Dave Mazza, Managing Director at Direxion, about the launch, in addition to the process of building out a 5G environment.
Looking at why now is the right time for these two ETFs to be launched, given the nature of the travel industry and the state the world is in, as Mazza explains, the themes presented in this market environment are emblematic of where investors find themselves in 2021.
“We’re seeing both long-term transformative change occur at a very rapid pace, which is now actually potentially being supported by the infrastructure package in the case of 5G and broadband acceleration,” states Mazza.
“At the same time, we know that there is continued emphasis on simply reopening the economy. We are hearing from our investors that there was interest in trading products to allow for amplified exposure in these cases, which is really the core reason why we brought to market OOTO and TENG; to give tactical traders the ability to get additional upside, should their trade their short term views be correct on the market areas.”
OOTO has broad exposure to stocks at the forefront of travel, particularly leisure and vacation excursions.
Broad Travel Exposure
“On the consumer discretionary side, there’s going to be hotel names in the portfolio, like Marriott and Hilton,” Mazza adds. “In addition, there are some casino operators and resorts in the portfolio, along with Disney and Churchill Downs. So, it’s not just hotels, not just theme parks, but the broad idea that the economy will be embracing companies of this nature and that investors and traders can take advantage of these.”
Mazza went on to point out how there’s a great number of U.S.-based airline companies in the portfolio. There are also a few other names, such as the Madison Square Garden and TripAdvisor, emphasizing the unique construction of the fund to.
Something Mazza wants to be clear is that leveraged ETFs are really intended to be used by investors who have the ability to pay attention to their portfolios. Primarily, that would be tactical traders. These funds are capturing longer-term themes that are playing out, such as economic re-opening, the revolution toward 5G, and the global vaccine rollout.
“Both of these, as we see him in markets over recent months, there’s no one-way path through either of those, so traders now have products where they can take advantage of the episodic volatility that we might see for some time, as the themes begin to play out, in particular, on the 5G side, which we know is intended to disrupt existing technology and existing platforms.”
This article originally appeared on ETFTrends.com.