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Direxion Debuts Leveraged-Bond ETFs

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Direxion Funds of Boston has just introduced four new ETFs that use triple leverage. The new funds are linked to NYSE Current U.S. Treasury Indexes and their annual expense ratios are 0.95 percent.

The funds are as follows:

–Direxion Daily 10-Year Treasury Bull 3x Shares (TYD)

–Direxion Daily 10-Year Treasury Bear 3x Shares (TYO)

–Direxion Daily 30-Year Treasury Bull 3x Shares (TMF)

–Direxion Daily 30-Year Treasury Bear 3x Shares (TMV)

The Direxion Shares bond ETFs attempt to deliver daily magnified exposure of 300 percent to 10- and 30-year Treasury indexes. Short ETFs and those with leverage are among the fastest growing segment of the ETF marketplace.

Effective immediately, Direxion Shares will change the name of all its funds to include the word “daily.” According to the company, this update better reflects the fact these funds seek daily investment goals and should be used strictly as short term trading tools.

In related news, State Street Global Advisors (SSgA), the investment management arm of State Street Corporation (STT), launched the SPDR Barclays Capital Convertible Bond ETF (CWB). It is the first convertible bond ETF available to U.S. investors.

The SPDR Barclays Capital Convertible Bond ETF is benchmarked to the Barclays Capital U.S. Convertible Bond >$500MM Index. Convertible bonds are bonds that can be exchanged, at the option of the holder, for a specific number of shares of the issuer’s preferred or common stock. At the end of 2008, 156 issues were included in the Convertible Index. The fund’s annual expense ratio is 0.40 percent.

“Offering a unique risk-return profile that combines the yield of corporate bonds with the capital appreciation potential of stocks, convertible bond exposure is experiencing increased demand as investors look to improve the diversification of their portfolios,” says James Ross, senior managing director at State Street Global Advisors.


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