Six More ETFs From Direxion

On Thursday (3/11/2010) Direxion added six new funds to its menu, giving investors leveraged and inverse opportunities in the BRIC countries, India, and the semiconductor sector.  This was Direxion’s second batch of new ETFs this year.  Back in February they launched two leveraged and inverse short-term Treasury ETFs.

The newest ETFs are

• Direxion Daily BRIC 2x Bull (BRIL) (summary)
• Direxion Daily BRIC 2x Bear (BRIS) (summary)
• Direxion Daily India 2x Bull (INDL) (summary)
• Direxion Daily India 2x Bear (INDS) (summary)
• Direxion Daily Semiconductor 3x Bull (SOXL) (summary)
• Direxion Daily Semiconductor 3x Bear (SOXS) (summary)

For those who haven’t heard the term, BRIC refers to the four largest emerging market nations: Brazil, Russia, India and China.  BRIL and BRIS  provide long and short coverage, respectively, to the BNY Mellon BRIC Select ADR Index with 200% daily leverage.  INDL and INDZ do likewise for the Indus India Index.

These four will be the first Direxion ETFs to offer anything less than 300% daily leverage.  Why they are doing so is unclear.  As we’ve said before, people who want to use leverage typically can’t get enough of it, so we doubt they are doing it for marketing reasons.  More likely some kind of legal or operational constraint prevents Direxion from achieving a 3X daily target in these particular indexes.

The remaining two new ETFs are domestically-focused, specifically on the PHLX Semiconductor Index, often called the SOX.  This index has been a popular tool among options traders for many years, so we suspect SOXL and SOXS will gain a following fairly quickly.  Both the long and inverse versions are leveraged at 3X.

As we always say, everyone should be aware that leverage is reset daily and results over longer periods can vary dramatically.  These are trading vehicles, not long-term investments.  Use with caution.

Patrick Watson
Invest With An Edge