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Thursday, December 03, 2009

Direxion Eyes Emerging Markets With Four Leveraged ETFs

Reported by Patricia Kelly

Direxion is seeking to increase its global footprint with the launch of four new leveraged ETFs on Thursday. The new funds offer long and short exposure to the China and Latin America markets.

Andy O'Rourke
Direxion
Senior Vice President, Marketing Director
The Direxion Daily China Bull 3X Shrs and the Daily China Bear 3X Shrs track the BNY China Select ADR Index, while the Direxion Daily Latin America 3X Bull Shrs and the Daily Latin America 3X Bear Shrs track the S&P Latin America 40 Index. All four ETFs are offered at 95 bps. The BNP China Select ADR Index follows select Depositary Receipts of China-based companies trading on the NYSE, NYSE Amex and NASDAQ. The S&P Latin America 40 Index tracks large, blue chip companies from the region.

The leveraged Bull and Bear index funds are designed to seek 300 percent of the daily performance or 300 percent of the inverse of the daily performance of their respective indices.

“We think there are a lot of people looking to trade within these country-specific sectors. It is not so much that we think the sector is going to be following any particular trend but rather that we believe there will be an interest in trading in that sector because our funds are short-term trading vehicles. So we look for sectors seeing lots of trading activity, such as China and Latin America, and chose to launch at this time while there is momentum for these sectors,” Andy O'Rourke, senior vice president, told The MFWire.

With the addition of these four funds, Direxion's ETF lineup counts 26 funds. The company's other ETFs include Bull and Bear large cap, mid cap, and small cap funds, as well as sector-specific ETFs that span financials, real estate, technology, developed markets, emerging markets, plus 10-year and 30-year treasury funds.

The firm may roll out several other ETFs that it has registered with the SEC but not yet launched, contingent on market conditions and demand.

“We don't have anything imminent,” O'Rourke said, “but we still have a few funds we registered a while back as part of a group of roughly forty funds but have no plans to launch in the immediate term. We didn't want to dump a ton of ETFs into the marketplace without seeing if there was a real need for them. As things progress, we'll start to look at the various sectors we think are of particular interest and areas where we think people are looking for greater exposure.”


Company Press Release

BOSTON, MA--(Marketwire - December 03, 2009) - Direxion, a pioneer in providing alternative investment strategies to sophisticated investors, is pleased to announce the addition of four new Direxion Shares Daily 3x ETFs to its existing lineup of multi-directional, leveraged funds. The new ETFs are leveraged Bull and Bear index funds that seek 300% of the daily performance, or 300% of the inverse of the daily performance (before fees and expenses), of the BNY China Select ADR Index(SM) and S&P Latin America 40 Index.

These new funds, and all Direxion Shares ETFs 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. There is no guarantee that the funds will achieve their objective.

"The emerging markets sector is increasingly tradeable in today's evolving global investment landscape," stated Dan O'Neill, Direxion Shares' President. "As a provider of innovative tools for sophisticated, institutional style investment strategies, we believe this is an incredibly opportune time to introduce new ETFs that offer leveraged exposure to China and Latin America on both the long and short side. Our Latin America mutual fund has been our largest mutual fund for some time, and our Daily Emerging Markets 3x ETFs have experienced heavier average volume recently. Tremendous trading opportunities appear to be underway in this space."

Many sophisticated advisors and institutional investors are using Direxion 3x ETFs to hedge positions in their current portfolios, while others are using the Funds to seek to take advantage of the volatility found in today's markets. The Direxion Shares ETFs represent the highest amount of leverage currently available in the ETF space.

The BNY China Select ADR Index(SM) tracks select Depositary Receipts of China-based companies traded on The New York Stock Exchange (NYSE), NYSE Amex and NASDAQ. The S&P Latin America 40 Index measures the performance of large, blue chip companies from the Latin American markets. "We are excited to continue expanding our unique line-up of innovative leveraged ETFs," continued O'Neill. "By moving more into country- and region-specific sectors with our China and Latin America funds, Direxion is taking another step toward providing sophisticated short-term traders leveraged exposure to the various markets in which they have high levels of interest."

The four new Direxion ETFs are:

  • Direxion Daily China Bull 3x Shrs (CZM), which magnifies the BNY China Select ADR Index (SM) by 300%;

  • Direxion Daily Latin America 3x Bull Shrs (LBJ), which magnifies the S&P Latin America 40 Index by 300%;

  • Direxion Daily China Bear 3x Shrs (CZI), which magnifies the BNY China Select ADR Index(SM) by -300%;

  • and the Direxion Daily Latin America 3x Bear Shrs (LHB), which magnifies the S&P Latin America 40 Index by -300%.

    By providing both a Bull and a Bear fund to track each of the indexes, Direxion gives seasoned investors the ability to seek competitive returns in rising and falling markets across a wide spectrum of diversified assets.

    To request more information on Direxion Shares 3x ETFs, or to speak to a member of the Direxion team, please contact Katrine Winther-Olesen at (973) 400-1341 or katrine@jcprinc.com.

    About Direxion

    Direxion Funds and Direxion Shares, managed by Rafferty Asset Management, LLC, offer leveraged index funds, ETFs and alternative-class fund products for investment advisors and sophisticated investors who seek to effectively manage risk and return in both bull and bear markets. Founded in 1997, the company has approximately $6.2 billion in assets under management as of 10/31/09. The company's business model is built on continuous product innovation, exceptional customer service and a commitment to building strategic relationships with distribution partners. For more information, please visit www.direxionshares.com.

    Disclosure:

    The correlation sought by the bull and bear funds is generally a multiple on returns of the index/benchmark. For example, on a given day, the Russell 1000 Index gains 1%, the Direxion Large Cap Bull 3x ETF is managed to gain approximately 3%(3%= 300% of 1%). If the same index decreased 1%, the Direxion Large Cap 3x Bear ETF is managed to gain approximately 3%.

    The S&P indexes are trademarks of Standard and Poor's, a division of the McGraw Hill Companies, Inc. The BNY Mellon China Select ADR Index is a service mark owned by The Bank of New York Mellon Corporation. All rights reserved. Indexes are unmanaged and cannot be invested in directly.

    An investor should consider the investment objectives, risks, charges, and expenses of Direxion Shares carefully before investing. The prospectus contains this and other information about Direxion Shares. To obtain a prospectus, please visit www.direxionshares.com. The prospectus should be read carefully before investing.

    Investing in index funds may be more volatile than investing in broadly diversified funds. The use of leverage by a fund increases the risk to the fund. The more a fund invests in leveraged instruments the more the leverage will magnify gains or losses on those investments. The Funds are not designed to track the underlying index over a longer period of time.

    The risks associated with the funds are detailed in the prospectus which include adverse market condition risk, adviser's investment strategy risk, aggressive investment techniques risk, concentration risk, counterparty risk, credit and lower-quality debt securities risk, equity securities risk, currency exchange risk, daily correlation risk, daily rebalancing and market volatility risk, depository receipt risk, foreign and emerging markets securities risk, sector securities risk, interest rate risk, inverse correlation risk, leverage risk, market risk, non-diversification risk, shorting risk, small and mid cap company risk, tracking error risk, and special risks of exchange-traded funds.

    Distributor: Foreside Fund Services, LLC.  

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