Direxion has launched two new tactical ETFs providing leveraged exposure to US-listed companies in the software and mining industries.
David Mazza, Managing Director, Head of Product at Direxion.
The Direxion Daily Software Bull 2x Shares (SWAR US) and Direxion Daily Metal Miners Bull 2X Shares (MNM US) have been listed on NYSE Arca and each come with an expense ratio of 1.07%.
The Direxion Daily Software Bull 2x Shares provides twice (200%) the daily performance of the S&P North American Expanded Technology Software Index.
The index comprises US-listed tech stocks engaged in application software, systems software, and home entertainment software sub-industries. It also includes complementary companies in select other industries, such as Activision Blizzard, Electronic Arts, Snap, Take-Two Interactive Software, and Zynga.
Constituents are weighted by float-adjusted market capitalization while capping the weight of the largest constituent at 8.5% and the cumulative weight of stocks above 4.5% at 45%.
As of the end of December, the index contained 129 stocks. The top ten positions, which accounted for 51% of the total index weight, were Microsoft, Salesforce.com, Adobe, Intuit, Oracle, ServiceNow, Autodesk, Synopsys, Palo Alto Networks, and Workday.
David Mazza, Managing Director, Head of Product at Direxion, said: “Software remains an important part of the information technology sector. At this point in technological development, software is ubiquitous to the point no one thinks about it, considering it is everywhere and anywhere. As this development continues to evolve, along with an uptick in volatility, the application, systems, and home entertainment software industry is one traders may want to consider.”
The Direxion Daily Metal Miners Bull 2X Shares, meanwhile, delivers twice (200%) the daily return of the S&P Metals and Mining Select Industry Index.
The index covers US-listed companies with market capitalizations above $1 billion that are engaged in the extraction of precious metals, aluminium, steel, copper, and coal and consumable fuels.
The index currently contains 32 stocks which are equally weighted on a quarterly basis subject to liquidity constraints.
Mazza added: “The five-year, $973 billion infrastructure plan provides a massive boost to government development. This includes transportation, roads, bridges, passenger and freight rail, public transit, electric vehicles, the electricity grid, broadband, and clean water. As this development continues to evolve, along with an uptick in volatility, the metals and mining industry is one traders may also want to consider.”
Inverse and leveraged ETFs provide an efficient means for sophisticated traders to obtain tactical exposures; however, they 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.