Direxion Plans 6 Leveraged ETFs

Ted

FYI: A recent filing from Direxion outlines plans for half a dozen ETFs that will offer 2x and 3x leverage in three key areas. The funds and their expense ratios are as follows:

Direxion Daily Lithium Bull 2X Shares, 1.09%
Direxion Daily Robotics & Artificial Intelligence Bull 2X Shares, 1.07%
Direxion Daily Preferred Stock Bull 2X Shares, 0.90%
Direxion Daily Lithium Bull 3X Shares, 1.24%
Direxion Daily Robotics & Artificial Intelligence Bull 3X Shares, 1.22%
Direxion Daily Preferred Stock Bull 3X Shares, 1.05%
Regards,
Ted
http://www.etf.com/sections/daily-etf-watch/direxion-plans-6-leveraged-etfs

JoJo26

These types of instruments should be banned.

msf

Direxion has an interesting history. As Potomac Funds, they originally offered 1.25x leveraged funds, and made a fair case for them. They also explained why higher leverage doesn't work well - because of rapidly growing costs of leverage as the multiplier increases, and because of the harmful interaction between multipliers and compounding (with ups and downs in daily prices).

Here's what they used to offer:
https://denvertradinggroup.com/wp-content/uploads/dtg-platinum/Trading/125approach.pdf

If you wanted a leveraged product, these struck me as rather sensible. Which of course meant that they didn't sell. So in 2006 they abandoned their reasoning and principles, and sought to market the most highly leveraged funds available. First to offer 2.5x in 2006, and 3x in 2008.

Ted

@msf: Thanks for the info, these funds, as I often have said, are not for individual investors.
Regards,
Ted