Things can change quickly in the capital markets. Bears can swiftly turn into bulls, and rallies can end suddenly and without warning. The same is true in the mutual fund business. For years Direxion played second fiddle to ProFunds (owner of ProShares). Now triple-leveraged ETFs have suddenly generated huge business for Direxion. Almost over-night, ProShares found itself chasing Direxion in the booming segment of leveraged ETFs. Just this week we learned of a new filing from ProShares for up to 94 new triple-leveraged ETFs.
Direxion has the first mover advantage. We highlighted the opening salvo in the 3x segment last November here. And boy oh boy, have they grown into the big league! ProShares still dominates the inverse and leveraged ETF space by a wide margin, but Direxion is showing lots of fight. Check our our Billion Dollar Club; it shows how Proshares has 5 ETFs trading with $1B or more in value on average each day. Direxion is climbing, with two ETFs (triple levered, btw) in the billion dollar a day camp. And with twenty 3x ETFs up and trading right now, they are moving quickly to snare the ETF junkies out there seeking a quick high (or low).
The cage match between these two firms will be fun to watch. How substantial and enduring will their lead be if/when ProShares gets their 3x ETFs up and running? Will this be another example of too many “me-too” products in the ETF space? Will both companies find that the only way to level the playing field is to compete on steroids too? Stay tuned.