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January 28, 2009 at 07:00 PM
The last quarter of 2008 was very busy for the ETF marketplace. Between Direxion Shares and ProShares, 22 new leveraged and short ETFs were launched. Also, Claymore, WisdomTree Investments and XShares Group each launched one ETF.
All of the Direxion ETFs attempt to magnify the performance of their underlying indexes by 300 percent on the upside or 300 percent on the downside. Direxion’s ETFs use a combination of derivatives, futures, and swaps to obtain their leverage.
According to the prospectus, the funds will charge annual expenses of 0.95 percent.
The Direxion Large Cap Bull 3x ETF (BGU) and the Direxion Large Cap Bear 3x ETF (BGZ) both use the Russell 1000 large cap index as a benchmark.
BGU provides investors or traders that are bullish on the prospects of large company stocks with 300 percent upside exposure to the daily performance of the Russell 1000. Conversely, BGZ attempts to deliver inverse daily performance of the Russell 2000 small cap index by 300 percent.
Direxion manages around $1.5 billion in mutual funds using similar leveraged and inverse performing strategies.
Not to be outdone, ProShares launched 8 leveraged and short ETFs that target commodities and currencies. The funds are the first such ETFs to offer this type of specialized exposure to these two asset classes.
