Tag Archives: direxion

Leveraged ETFs Chapter 12: Levered and Lightly Levered: Which Direxion To Choose?

MarketsMuse update courtesy of extract from Olly Ludwig’s ETF.com profile of Direxion Shares’ latest levered product. Continuing in the direction of embracing RIAs, Direxion is hoping the latest incarnation will further innovate and provide investment advisors with a new tool. Here’s the opening from ETF.com’s profile….

Olly Ludwig, ETF.com

Just when you thought that the leveraged ETF niche has been carved out and accounted for, New York-based Direxion Shares has come out with what it calls “lightly levered” ETFs that have 1.25X exposure.

To hear Direxion President Brian Jacobs speak to this new ripple in the world of leveraged ETFs, the company aims to give investors a more easily managed investment tool than the 2X and 3X ETFs that have ruled the leveraged roost so far. But, no less, Jacobs told ETF.com that Direxion is looking to reinvent the leveraged ETF for an advisory channel increasingly focused on asset allocation in portfolio construction.

For the full story from ETF.com, please click here


New Equity ETF Hopes to Combat Volatility

MarketMuse update courtesy of Nasdaq’s Len Zacks.

2015 has started out week for the US equity market but Direxion has a plan to change that.

After delivering handsome returns last year, the U.S. equity markets have started the year on a weak note.  Slumping crude oil prices, strong dollar and global growth concerns with Europe fighting deflation, Japan still struggling in a recession and China losing steam, are weighing upon the market sentiment, leading to increased market volatility.

As a result, low volatility funds are gaining immense popularity as they provide improved risk adjusted returns in a choppy market. Given the trend, Direxion has recently filed for a product focusing on this niche segment

Below, we have highlighted some of the details of the newly filed product.

Direxion Value Line Conservative Equity ETF

As per the SEC filing, the fund seeks to track the Value Line Conservative Equity Index. The index consists of roughly 170 U.S. stocks that have been selected using Value Line’s proprietary Safety Ranking. The ranking methodology measures the total risk of a stock and its capability to withstand an overall equity market downturn relative to the other stocks in the Value Line universe which consists of roughly 4,000 stocks.

The total risk or volatility of each stock is measured through its Price Stability Score and Financial Strength rating. The Price Stability score for a stock is based on a ranking of the standard deviation of weekly percentage changes in the price of the stock over the past five years.

For the Financial Strength rating, a number of balance sheet and income statement factors like the company’s long-term debt to total capital ratio, short-term debt and amount of cash on hand are reviewed to assign a ranking.

Sector-wise, consumer staples and health care form a large part of the index.

How Does it Fit in a Portfolio?

The product could be an interesting choice for investors seeking to avoid market volatility but remain invested in stocks.  Low volatility products have proven beneficial for investors given their superior risk adjusted returns.

These funds have gained immense popularity in the past few months given increased market volatility on the back of global growth concerns, slumping crude prices and worries related to the timing of interest rate hike in the U.S.

For the complete article on Nasdaq’s site, click here.


Macro Muse: Expert Says: Short USTs, Yields Poised to Rise

Courtesy of one of our reader’s sighting this a.m.’s comments from Rareview Macro LLC’s “Sight Beyond Sight”, we’re compelled to cite the original source:

Neil Azous, Rareview Macro LLC
Neil Azous, Rareview Macro LLC

“…For the first time in months the setup is compelling enough for us to short US Fixed Income.

Earlier this morning the model portfolio sold short enough 30-year bond futures (symbol: USM4) at 135-28 to risk $50,000 USD per basis point. The reference point or last yield on the 30-year cash bond is ~3.40%. The first target in cash yield terms is 3.48% and the second is 3.52%. A stop at 3.36% (closing basis) has been placed. This is a short-term tactical trade with a risk-reward profile of three to one (3:1)…”

For those who embrace the above outlook, our insightful reader who pointed out the above sighting caveats: You can increase your chances by using a non-leveraged short ETF like TBF or simply shorting the long ETF. Beware: shorting bonds ETFs will result in you having the pay the dividends, which can be substantial.

Below includes a snapshot of (3) inverse-bond ETFs that could be considered by those seeking to hedge against or exploit a pending spike in UST yields. *


ETF Adoption Continues at Brisk Pace

marketsmedia logo  Excerpt courtesy of MarketsMedia

Providers of ETFs and mutual funds are using targeted marketing approaches to match the right products with the right customers.

With ETFs use climbing among active investors, both retail and institutional, packagers of ETFs view the product as a low-cost vehicle for investors to access alternative strategies such as those employed by hedge funds, many of which act as sub-advisers for the ETFs.

ETF use among registered investment advisors (RIAs) has grown nearly 27% annually over the past 5 years, according to research firm Cerulli Associates anticipates this growth to continue.

“The allocation to ETFs among RIAs grew 48% from 2011 to 2012,” said Kenton Shirk, associate director at Cerulli. “The RIA channel is an extremely attractive opportunity for asset managers.”

ETFs gained popularity as a cost-effective method to achieve diversification, but with increased adoption they have evolved to cover a wide variety of investment strategies.

“ETFs provide an easy way for managers to offer out products to alternative investors,” said David Beth, president and chief operating officer at WallachBeth Capital. “The ETF wrapper is very easy and transparent.”

David Beth, President / COO WallachBeth Capital

Fund manager Direxion offers leveraged and inverse ETFs for active traders looking to execute short-term trading strategies.

“We consider ourselves a provider of alternative investment strategies,” said Andy O’Rourke, Direxion’s chief marketing officer. “We also have a few strategy-based non-leveraged ETFs that they have rules-based indexes, such as KNOW, which is an ETF that tracks the buying activity of corporate insiders on the secondary market.”

Direxion recently unveil a marketing campaign designed to inform experienced active traders about the potential benefits of the firm’s 3X leveraged ETFs. A departure from simply highlighting the flexibility of trading in either direction, the marketing campaign’s 60-second television commercial invites active traders to join “The Fellowship of the Bold.” Continue reading

Direxion Files Plans to Introduce Another Bearish Bank ETF (FAZ, FAS, XLF)

By Benzinga.com

Direxion, the firm behind the behind the infamous yet highly popular Direxion Daily Financial Bear 3X Shares FAZ +0.64% , is looking to add its lineup of non-leveraged products and has filed plans with the SEC to possibly introduce the Direxion Daily Financial Bear 1X Shares.

The Direxion Daily Financial Bear 1X Shares would not be a direct equivalent to FAZ because the new ETF, assuming it comes to market, will seek daily inverse investment results that correspond to the Financial Select Sector Index, the same index tracked by the Financial Select Sector SPDR XLF -0.11% .

FAZ and its bullish equivalent, the Direxion Daily Financial Bull 3X Shares FAS -0.69% , track the Russell 1000 Financial Services Index. Direxion’s filing didn’t include a ticker for the new fund, but the firm did say the fund will trade on the New York Stock Exchange and have an expense ratio of 0.65%.

That’s 30 basis points lower than what FAS and FAZ charge. The new Direxion fund could be a rival to the ProShares Short Financials SEF +0.17% , which is an inverse, non-leveraged product. ProShares, the largest issuer of inverse and leveraged ETFs, also issues the ProShares Short KBW Regional Banking KRS -2.70% , which is also a bearish, non-leveraged ETF.

Direxion, the second-largest sponsor of inverse and leveraged funds, has been looking to expand its non-leveraged offerings. The firm has introduced the the NASDAQ-100 Equal Weighted Index ETF QQQE -0.58% and the Direxion All Cap Insider Sentiment Shares KNOW +0.36% , among others in the past year.

(c) 2012 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.