Direxion, known for its 3x leveraged ETFs, launched four new funds today (12/03/09) targeting China and Latin America. The new ETFs seek 300% of the daily performance, or 300% of the inverse of the daily performance, of the BNY China Select ADR Index and S&P Latin America 40 Index.
The new Bull 3x funds will have a 0.94% expense ratio and the Bear 3x funds will have a 0.95% expense ratio. The capitalization-weighted BNY China Select ADR Index currently has 39 constituents. The new Direxion Latin America funds are based on the same index as the unleveraged iShares S&P Latin America 40 Index Fund (ILF).
The four new ETFs are:
- Direxion Daily China Bull 3x Shares (CZM) (CZM overview)
- Direxion Daily China Bear 3x Shares (CZI) (CZI overview)
- Direxion Daily Latin America 3x Bull Shares (LBJ) (LBJ overview)
- Direxion Daily Latin America 3x Bear Shares (LHB) (LHB overview)
Direxion reminds potential buyers of these new ETFs that they “are intended for use only by sophisticated investors who understand the risks associated with seeking daily leveraged investment results and plan to actively monitor and manage their positions in the funds.” The company provides additional educational material on the characteristics and risks of daily leverage in the education section of its website.
As with all Direxion 3x products, I expect these new ETFs to do a great job of meeting their daily objective. However, do not buy them if you do not understand the implications of daily leverage.
- Today’s (12/03/09) press release from Direxion
- Direxion’s Daily/Cumulative Performance Illustrator tool
- Understanding the 3x Impact
Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.