We Just Had Direxion the Creator of over 100 ETFs and Mutual Fund Products Answer Questions Live
Direxion offers leveraged and Inverse ETFs that provide opportunities for traders to: Magnify short term perspectives with daily 3x and 2x leverage, utilize bull and bear funds for both sides of the trade, and trade through rapidly changing markets.
Direxion builds bold products for investors who want more than the status quo. Their index-based products deliver direction options, magnified exposure, and long-term, rules-based strategies. Direxion was founded in 1997, the company has approximately $12.5 billion in assets under management as of March 31, 2017. Direxion’s diverse suite of products helps investors navigate today’s ever-changing markets. To learn more about their products please visit www.DirexionInvestments.com. What follows is a recap of our Q&A. For the full transcript please GO HERE.
As someone new to trading, what exactly is a 2x/3x leveraged ETF? — michaelcasale
They are definitely for more experienced traders. Not for someone just starting out. Not for new traders. Take a look here first. direxioninvestments.com/etf… Call 866–476–7523 with more questions.
Does it cost anything to hold a 3x overnight? If you hold a position for several days, are expense ratios/management fees charged for each day you hold? — mikesz
As with all other ETFs and Mutual Funds, we charge a management fee included in expense ratio & finance fee. Also disclosed on fund fact sheets/prospectuses. Also, make sure to monitor your positions closely, especially in volatile markets. One day worth of management fees are taken out of NAV on a nightly basis.
What is the risk for investors of leveraged ETFs exactly and how can’t they lose more than their initial investment? — KevInvest
You can’t lose more than initial investment, but NOT for investing and buying and holding. Trading only. Here’s info on compounding (can be negative or positive depends on path of index). direxioninvestments.com/lit…
Can you explain why leverage ETFs aren’t a good investment vehicle for a long term investor? Time decay? Spits? Can you also explain how time decay and splits affect the share price? — BoostPortfolio
Decay equals compounding. It can be negative or positive. It depends on path of the index direxioninvestments.com/lit…. Here are detail on splits at direxioninvestments.com/lev….
How do you come up with your leveraged ETFs and are there any tax effective strategies around trading/buying them? Are any of your 2x and 3x leveraged ETFs suitable to hold long term or do they all decay over time— Scheplick
Market interest in sector/asset class that’s “tradable”. It is not appropriate for us to advise on individual tax strategies. For trading only we are happy to help your understanding. It is important to understand composition and risk of LETFs. More information can be found at direxioninvestments.com/etf…
When do you decide to decay and have the risk-takers losing their money? — ForeverStockss
Happy to help your understanding. It is important to understand composition and risk of LETFs. Click HERE to read more.
I have followed $INDL with great interest this year to date.. Will you do other SEA EM bull ETFs? — KetchuporMustard
We also have $BRZU $YINN $EDC $LBJ $RUSL $KORU $MEXX. Here’s a link to our lineup.
Do you use futures in levered ETFs? If so, how do you fight contango decay? (paying up every roll) $STUDY — patrickrooney
We can, but typically total return swaps for leverage. More information canbe found by clicking HERE.
Do you have any plans for a 3x leveraged bitcoin trust fund? — satan_god
No plans for bitcoin or cryptocurrency funds. You can sign-up for new product alerts though at direxioninvestments.com/ale…
Does the maximum slippage/erosion occur when there is a roll-back? How much is it? If you’re Long $NUGT during a massive gold run up you could make 10,000%. Why would you be concerned with decay? — bruddy
Compounding can be negative or positive, it depends on the path of the index. More information at direxioninvestments.com/lit… We’re agnostic on opinions/predictions. But, we have bull AND bear funds for both sides of the miners (no gold funds).
What happens if the underlying for a 3X ETF drops more than 33%? Does the value of the ETF become negative? To clarify, I mean 33% in one day. — rickjarosh
Very unlikely that would occur in single day, given the trading curb rules that are in place on most exchanges. But, the ETF has the right to cap for single day. More information can be found HERE.
What are your top five favorite ETFs and do you trade them or keep them as a forever stock. — bullobo
No favorites here. Leveraged ETFs are trading tools to express your opinion on the market. It’s all about the trader.
Is there a place where I can find the underlying indexes for the leveraged ETFs or do I have to read each prospectus? — Chartblocker
Yes. Click any ETF on our site and the underlying index is listed.
When do I add liquidity to the market and when do I take liquidity out of it using limit orders?--hoominx
I think you’re talking re-balancing. Click here for more info. Also, here are 4 rules for trading any ETF.
Is it possible to create a single leveraged ETF where the trader chooses the leverage 2x or 3x at the time of trade? — jjfrost
No. You can sign up for new product alerts though at direxioninvestments.com/ale…
I bought $18K shares of $DUST with an average price of $60. Do you see $DUST reaching back to $60+ soon? Recommendation? — TeriA
LETFs are passive and rely on DAILY Index movements. $DUST and $NUGT tied to (GDMTR) NYSE Arca Gold Miners Index. You can call for help at 1.800.851.0511
Will you be getting into the ring to create a cryptocurrency leveraged ETF? — gabebesharea
No plans for any bitcoin or cryptocurrency funds, liquidity is not suitable. Sign-up for new product alerts at direxioninvestments.com/ale..
Why do you do reverse splits or splits on leveraged ETFs? — swissbankster
Splits and reverse splits adjust share prices to a cost-efficient level for the holder. It has no impact to the notional value though.
Do you know the approximate price $JNUGS should be when $GDXJ finds its way back to $46? Why did you pull the plug on us when GOLD was flying up? Will you be doing that again next time gold has a rally?— inforlife
We don’t have any commodity LETFs. There is no way to predict. LETFs reset daily. Please call us at 800.851.0511 we are happy to help your understanding. It is important to understand the composition/risks. Click here for more information.
Why don’t you double $JNUGS price and half $JDST, so both are around $30 like $NUGT/$DUST. 1:2 and 2:1 splits juniors? — nobodyWins
Splits adjust the share price to a cost-efficient level for holders, without affecting the notional value. More information can be found at direxioninvestments.com/lev…
How do you hedge ETFs? In your portfolio to protect the gains you have now? — rockolapop19
Compounding increases (For a bull fund) exposure beyond your original 3x, so it is more sensitive to future moves. So consider selling excess in order to manage expectations.
Can you show us how Direxion makes money from bears and bulls? — Gold_ache
As with all ETFs & Mutual Funds, we charge a management fee included in the expense ratio. This is disclosed on all fund fact sheets/prospectuses.
Are 2x and 3x ETFs here to stay? Or will regulations get them canned? — alexsimonelis
Leveraged ETFs were first approved 11 years ago. We’ve been around for over 9 years. We are looking forward to serving traders into the future.
What’s the iNAV and NAV? — SnapperGrabber
Make sure you’re looking at iNAV vs. NAV. Nav = Net asset value, iNAV = intraday net asset value (Mutual Funds strikes NAV at the end of the day), ETF prices intraday plus strikes closing NAV.
What does leveraged mean? — NYPredictor
Here is a good place to start: direxioninvestments.com/etf…
I’m a new trader and only make a few moves per month. Would you recommend a leveraged fund for a neophyte like me? — turtlepace
Daily monitoring is very important. Here’s more info on compounding (it can be negative or positive). direxioninvestments.com/lit… .
Is it worth it to invest partially in a mutual fund with a small portfolio of 3,000? —Bea1Rhyme
Not Direxion Leveraged ETFs. They are for experienced traders who know leverage. We recommend contacting retail platforms. Best of luck!
Which ETF would be good to hedge a currency? Canadian versus US. Thank you for your help .— elai02ne
Nothing relevant here just yet. Sign up for alerts here though.
What’s the total shares outstanding on $SPXS and $SPXL? — kckornegay
$SPXL has 16.6Mshrs and 601 MM market cap. $SPXS has 10.3MM shares, and a 396.42MM market cap.
Will $JNUG ever see $300+ per share like last July before the 10–1 split and the 4–1 reverse split. I’m getting old! — jgabriele
Don’t buy and hold and forget about these. Always monitor! Good luck.
DZ/$EDC are both very profitable moves when you understand, but will $EDZ be de-listed? — ironideas
No plans to de-list. Great Bull/Bear tactical trading tools for view on EM. Sign up for alerts here.
Can we see a levered $VIX ETF/Inverse ETF from Direxion? — Mr_Derivatives
No plans. Sign up for new product alerts at direxioninvestments.com/ale…
Is deterioration real and what causes it? — dank3st
Positive and negative compounding does exist. It can be negative or positive it depends on the path of index). More information can be found at direxioninvestments.com/lit..
Why is $JNUG and $JDST sometimes not correlating with $GDXJ? — 25kTrading
$JNUG/$JDST track MV Junior Miners Index (Daily Re-balanced 3x Bull/3x Bear) respectively. Not $GDXJ, though correlated.
For a newbie, can you please explain how ETF work? Especially leveraged? — macrochartfreak
Yes! Take a look here first. direxioninvestments.com/etf… . It is important to understand risks and impact of volatily/path before trading.
What are the costs associated with trading ETFs? — s_awa
This is disclosed on all fund fact sheets/prospectuses. Plus your brokers fee.
Why are there two identical securities where (in terms of risk) only difference is magnitude of severity? — jjfrost
Strong interest from traders ranging from -1x, 1.25x, 2x →3x. Pick the right leveraged point based on conviction of direction path+vol.
How is the price calculated for leveraged ETNs? I understand the price isn’t based on buyers/sellers of that ETN. — supasayin
We don’t have any Exchange Traded Notes. Very different, and different risks from ETFs.
How do you communicate to investors that longer term holding periods aren’t suitable for your leveraged ETFs? — sspencer_smb
Great question. Lots of info on our site direxioninvestments.com/edu… and the first page of fact sheet & prospectus. Also the names all include “DAILY”.
How is trading a 3x leveraged ETF more advantageous to trading on margin? — agertz
Different ways to use leverage. Margin you need 50% collateral plus the interest fee payment to the bank (several %). For a 3X ETF, for every $1 invested you get $3 of exposure.
Thanks for the opportunity to take an hour and chat with everyone. Feel free to continue asking us anything. Happy trading all!
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