Direxion Announces First New ETFs of 2009
January 8, 2009 by Ron Rowland
Filed under Commentary, ETF IPOs (New ETFs), ETFs
Two new 3x ETFs are slated to start trading today as Direxion launches products based on the Russell MidCap Index. The “bull” version is designed to provide +300% the daily move in the index, while the “bear” version provides -300% the daily move.
Direxion, the boldest newcomer to the ETF space, first introduced the world to 3x ETFs just two months ago with the launch of eight new funds. They followed up in December with six more, and with today’s additions now have a total of sixteen 3x ETFs.
The two new Direxion ETFs are:
- Direxion Mid Cap Bull 3x Shares (MWJ)
- Direxion Mid Cap Bear 3x Shares (MWN)
Leveraged ETFs have received some negative comments from reporters who do not understand how they work. In order to provide leverage while avoiding the risk of total loss, the leverage on these ETFs must be reset every day. Therefore, performance periods longer than one day will not be equal to 3x the index. The same is true in the 2X ETFs offered by Rydex and ProFunds, but the effect is even more dramatic in the Direxion 3X funds. Direxion has additional information on the compounding effects of leveraged ETFs.
These ETFs are not intended to be long-term investments. Do not purchase or trade leveraged ETFs until you understand the impact of daily rebalancing.
Well said, esp the part about daily leverage. Seems like pundits, punks, and other paraders of info somehow never looked under the hood, as I’ve read numerous articles slamming these etfs and calling them a bust since they didnt match the inverse of the index for, say, ALL of 2008!! HELLO, they weren’t devised to function that way! Cripes@#$^&*