Direxion launches 3x leveraged robotics, automation and AI ETF

Apr 23rd, 2018 | By | Category: ETF and Index News

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Direxion has launched the Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 3X Shares (UBOT US) on NYSE Arca, providing triple leveraged exposure to an equity index composed of firms operating in the robotics, automation and AI industry.

Direxion changes index for leveraged small cap ETF

Sylvia Jablonski, managing director at Direxion.

UBOT returns 300% of the daily performance of the Indxx Global Robotics and Artificial Intelligence Thematic Index.

The index provides exposure to exchange-listed companies in developed markets that are expected to benefit from the adoption and use of robotics and/or AI. This includes companies involved in industrial robotics and automation, non-industrial robots, artificial intelligence and autonomous vehicles.

The index currently has 28 constituents (as at 19 April 2018). 

Japan is the largest country exposure, accounting for half (50.8%) of the total index weight. US firms make up just over a quarter (26.9%) of the index with the next largest country exposures being Switzerland (8.6%) and the UK (5.1%).

The top five holdings are Nvidia (9.1%), Intuitive Surgical (9.0%), Keyence (8.1%), Fanuc (7.9%) and Yaskawa Electric (7.9%). The index has returned 20.6% over the past three years.

The fund has an expense ratio of 123bps.

“The robotics, artificial intelligence, and automation industries are rapidly growing and evolving,” said Sylvia Jablonski, managing director at Direxion. “The launch of UBOT allows traders to take a bold position in companies that are at the forefront of technology.”

Inverse & leveraged funds may provide an efficient means for sophisticated traders to obtain tactical exposures; however, they are generally considered unsuitable for retail investors who may not fully understand the risks involved.

The funds tend to decay in value if held for an extended period of time, potentially leading to significant losses especially in volatile but range bound markets. This characteristic generally increases with the degree of leverage involved.

Rival issuer Global X has $2.5bn in an ETF which tracks the same underlying index as UBOT but without the leverage factor. This ETF, the Global X Robotics & Artificial Intelligence ETF (BOTZ US), was launched on Nasdaq Exchange at the end of 2016 and has an expense ratio of 68bps.

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