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The Bull Market In Short ETFs Is Alive And Well
By Simon Maierhofer, Co-Founder
December 22, 2008
SAN DIEGO (ETFguide.com) - Direxion continues to capitalize on the bull market in short ETFs and leveraged ETFs. The Massachusetts-based ETF provider unleashed eight triple leveraged (long and inverse) ETFs earlier this year and follows up their initial offering with another set of six triple leveraged ETFs.
The new suite of triple leveraged long and short ETFs is linked to the MSCI EAFE, MSCI Emerging Markets and Russell 1000 Technology Index.
The MSCI EAFE Index consists of 20 developed market country indexes, excluding the U. S. and Canada. The iShares MSCI EAFE Index ETF (NYSEarca: EFA) was the first to track the MSCI EAFE Index.
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Below is an excerpt from the ETF Profit Strategy Newsletter – Published on Oct.21, 2008
At the time, the Dow was above 9,000. It dropped below 7,500 and rallied into Nov./Dec
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Market Meter
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Short-Term: published on Oct. 21, 2008
The Dow should find a “trade-able bottom” between 7200 – 7,500
Mid-Term: published on Oct. 21, 2008
Once bottomed, the stock markets will rally into Nov/Dec
Long-Term: >> Sign up to find out
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How did you do? >> Sign up for the ETF Profit Strategy Newsletter to be a step ahead
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The MSCI Emerging Markets Index consists of 21 emerging market country indexes, such as China, India, Brazil, Russia and Taiwan. The iShares MSCI Emerging Market ETF (NYSEarca: EEM) and Vanguard Emerging Markets ETF (NYSEarca: VWO) provide exposure to the same index.
Never miss a beat >> Sign up for the #1 FREE ETF Newsletter
The Russell 1000 Technology Index carves out the technology sector from the Russell 1000 universe, similar to the Technology Select Sector SPDRs (NYSEarca: XLK).
Below is the suite of Direxion ETFs which debuted on Wednesday.
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Name
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Ticker
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Direxion Developed Markets Bull 3x Shares
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DZK
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Direxion Developed Markets Bear 3x Shares
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DPK
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Direxion Emerging Markets Bull 3x Shares
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EDC
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Direxion Emerging Markets Bear 3x Shares
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EDZ
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Direxion Technology Bull 3x Shares
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TYH
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Direxion Technology Bear 3x Shares
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TYP
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The triple leveraged ETFs have become popular in a hurry. Within a few months, Direxion, a new-comer to the ETF market place, has amassed nearly $1 billion in ETF assets.
Short ETFs offered by Rydex and ProShares have been wildly popular. A look at ETF performance numbers reveals that this year’s list of top performers is dominated by bear ETFs followed by bond and currency ETFs. All of which provided effective hedging against declines seen in major benchmarks such as the S&P 500 (AMEX: SPY).
I have not been bullish on many markets this year. However, in a recent Weekly ETF Pick (available to members only), we highlighted the iShares China 25 ETF (NYSEarca: FXI) as an interesting opportunity.
The Shanghai Composite Index has broken out of an eleven month trading channel (see chart below). In addition to FXI, the new Emerging Markets Bull 3x Shares (NYSEarca: EDC) might stand to benefit from a continuation of this breakout.
Direxion has more triple leveraged ETFs waiting for the green light from the SEC. Among the pending ETFs are a bull and bear 3x shares for the: BRIC, China, Clean Energy, Commodity, Dow 30, India, Japan, Nasdaq and Real Estate.
Leveraged ETFs are certainly not a trading tool for the faint of heart. Like strong alcohol though, they can be enjoyed responsibly. For a brief history on short and leveraged ETFs along with conservative trading strategies, read the related article (Profit Responsibly – How To Use Short ETFs). |
