Inverse and leveraged exchange-traded fund provider Direxion has launched the Direxion Daily Euro Stoxx 50 Bull 3X Shares (EUXL) which provides 300% of the daily performance of the Euro Stoxx 50 Index.
Sylvia Jablonski, managing director at Direxion.
The Euro Stoxx 50 Index provides a blue-chip representation of supersector leaders in the eurozone. The index covers 50 stocks from 11 eurozone countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.
The index is weighted by free-float market cap, and each component’s weight is capped at 10% of the index’s total free-float market cap.
The Euro Stoxx 50 is the most followed gauge of the eurozone equity market and is widely used as a reference for passively managed funds focused on eurozone equities – according to Direxion, total assets under management for ETFs tracking the index were estimated to be approximately €41.5 billion as of the end of June 2017.
“We are delighted that Direxion has chosen our European flagship index to underlie an exchange-traded fund in the US,” said Matteo Andreetto, chief executive officer, STOXX. “The Euro Stoxx 50 Index remains Europe’s most favoured and well-known blue chip equity index. Its liquidity, transparency and rules based methodology makes the index an ideal tool to participate in the performance of the eurozone equity markets.”
The index has gained 6.9% year to date (13 July 2017) although it peaked on 5 May and has since lost 3.3%.
Sylvia Jablonski, managing director at Direxion believes the outlook for European equities remains bullish, with growing interest from traders. She said: “As political risks dissipate following the results of the French elections, the eurozone economy strengthens and prospects for earnings improve, this ETF may offer active traders exposure to a highly reputable index tracking 50 of the largest and most liquid blue-chip European stocks.”
The fund has a total expense ratio of 0.95% due to a contractual fee waiver in place until at least September 2018. The fund’s gross expense ratio is 1.05%.
Inverse and leveraged ETFs are intended only for investors with an in-depth understanding of the risks associated with seeking leveraged investment results, and who plan to actively monitor and manage their positions. While these funds may provide an efficient means for sophisticated traders to obtain tactical exposures, they are generally considered unsuitable for retail investors who may not fully understand the risks involved, such as the potential for considerable losses in volatile but range bound markets if the fund is held for an extended period.