2008 Edgy Award for Boldest ETF Newcomer Goes to DirexionShares

Direxion has a reputation as an innovator in the mutual fund world.  They were the first company to offer an inverse small cap fund in 1999.  They also had another industry-first in 2006 with the introduction of mutual funds using 250% leverage.  However, when it came to ETFs, Direxion was conspicuous by their absence.

All that changed in late 2008:  DirexionShares have now arrived, sporting 3x leverage.  ETFs with 300% leverage were another industry first.

DirexionShares were introduced in two waves this year.  The first batch, released on November 6, consisted of the following eight:

-Direxion Large Cap Bull 3x Shares (BGU)
-Direxion Large Cap Bear 3x Shares (BGZ)
-Direxion Small Cap Bull 3x Shares (TNA)
-Direxion Small Cap Bear 3x Shares (TZA)
-Direxion Energy Bull 3x Shares (ERX)
-Direxion Energy Bear 3x Shares (ERY)
-Direxion Financial Bull 3x Shares (FAS)
-Direxion Financial Bear 3x Shares (FAZ)

The second wave consisted of six new 3x ETFs, released December 17:

-Direxion Developed Markets Bull 3x Shares (DZK)
-Direxion Developed Markets Bear 3x Shares (DPK)
-Direxion Emerging Markets Bull 3x Shares (EDC)
-Direxion Emerging Markets Bear 3x Shares (EDZ)
-Direxion Technology Bull 3x Shares (TYH)
-Direxion Technology Bear 3x Shares (TYP)

With 3x leverage, all these funds have a lot of juice.  As we previously reported, one of the ETFs from the first batch set a record by doubling in price in only 7.5 hours.  Investors should also be aware that the leverage is reset daily, which means that longer-term performance can be significantly more or less than 3x the index.

The ETF marketplace suffered from product oversupply in 2008, causing a surge in ETF closures among those that could not attract enough assets to keep afloat.  Making a late entry into an overcrowded market was a bold move on the part of Direxion.  An initial plunge consisting of industry-first 3x products was also a bold move.  That’s why DirexionShares earns our 2008 Edgy Award for Boldest ETF Newcomer.