Direxion, along with their rival ProShares, dominates the
leveraged ETF market. The company has just under 50 products in
its lineup, and it has over $5 billion in total assets under
Some of its most popular funds are well known to active
-tracking daily 3x bullish performance of the financial
-tracking Daily 3x bearish performance of the small cap market.
Together, these two account for roughly 35% of Direxion's assets,
so clearly the firm is quite dependent on these two domestic
names for revenues.
Possibly in hopes of diversifying their product mix,
Direxion has recently filed
for several new
in the leveraged and inverse leverage market. In fact, the
company filed for 8 new products, a number if approved that would
bring the total offering of Direxion up to 54 (also read
BDCL: Yield King of Leveraged ETFs
The eight all target international markets with bull and bear
pairs-and 3x leverage-for two developed and two emerging markets,
offering up new exposure options. Still, investors should
remember that these still have a ways to go before launching,
though we have highlighted some of the key points regarding these
potential ETFs below:
Direxion filed for two Chile ETFs tracking 3x and -3x
versions-on a daily basis-of the MSCI Chile IMI 25/50 Index. For
this exposure, both products will charge investors 1.10% a year
The index is also the basis for the popular unleveraged fund
tracking the Chilean market,
iShares MSCI Chile Capped ETF (
. This fund has just over half a billion in total assets, and
sees about 170,000 shares in volume per day.
In terms of exposure, the product is tilted towards utilities
at 25% of the assets, while financials and consumer staples round
out the top three. Cap levels are heavily skewed towards large
caps as these account for 85% of total assets (read
Forget China, Buy These Emerging Market ETFs
Over the past one year period, ECH has slumped and is actually
down about 5.1% in the time frame. Currently though, ECH has a
Zacks ETF Rank of 2 or 'Buy'.
Looking across the Pacific, Direxion also revealed plans for
3x and -3x ETFs that track the MSCI Hong Kong Index on a daily
basis. Exposure will be slightly cheaper in this liquid market,
coming in at 1.08% a year for both the bear and bull funds.
Much like its Chilean counterparts, these funds look to be the
leveraged versions of the
iShares MSCI Hong Kong Index Fund (
. This product sees just under four million shares a day in
volume, and a huge market cap approaching $3.5 billion.
This unleveraged ETF is heavily focused on financials, as real
estate makes up 33% and financials account for 28% of assets.
Consumer discretionary and utilities round out the top four while
large caps make up nearly the entire fund (see
Hong Kong ETFs to Surge in 2013?
EWH has seen a solid performance over the past year, adding
about 15.4% in the time frame. Currently, the fund has a Zacks
ETF Rank of 3 or 'Hold'.
Staying in Asia, Direxion is also looking to provide 3x and
-3x daily exposure to the Japanese market. While there are a lot
of popular indexes tracking this nation, these funds seek to use
the MSCI Japan Index as their basis, charging 1.08% a year in
Once again, there is a popular iShares product tracking the
unleveraged version of the index, this time with
. This product has seen its popularity surge in recent months
thanks to the yen's collapse, as it now has roughly 31 million
shares in volume a day and a market cap approaching $9.5 billion
Small Cap Japan ETFs: Overlooked Winners?
Exposure in this ETF is heavily concentrated in the large cap
segment, while there is an even split between value and growth
stocks. Sector holdings are heavy in the consumer
discretionary market, with industrials and financials taking the
other two spots.
In the trailing one year period, perceptions have shifted on
EWJ and Japan in general, leading this fund to a 19.4% gain in
the trailing 12 month time frame. As of now, this fund has a
Zacks ETF Rank of 2 or 'Buy'.
Mexico ETF investments have been very hot lately, so it isn't
too surprising that Direxion is hoping to soon jump in to this
market with daily 3x and -3x funds. Both will track the MSCI
Mexico IMI 25/50 Index with their respective leverage rates over
a single day, charging 1.10% in fees for the exposure.
The iShares unleveraged counterpart in this market is the
MSCI Mexico Capped ETF (
. This fund has just over three billion in total assets and just
below 2.5 million shares of volume in a normal session.
Exposure in this fund is somewhat concentrated, as consumer
staples account for nearly 30% of the portfolio, followed by 20%
in materials, and 17% in telecoms. Large caps also dominate from
a cap perspective, although less so here than in other funds on
the list, accounting for about 75% of the total.
This ETF has been the best performer of the four during the
past year, gaining 23.7% in the time frame. This fund also
receives our highest rating with a Zacks ETF Rank of 1 or 'Strong
Buy', so good things could continue in this product in the months
Inside the Surging Mexico ETF
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ISHARS-MSCI CHL (ECH): ETF Research Reports
ISHARS-HONGKONG (EWH): ETF Research Reports
ISHARS-JAPAN (EWJ): ETF Research Reports
ISHARS-MEXICO (EWW): ETF Research Reports
DIR-FIN BULL 3X (FAS): ETF Research Reports
DIRX-SC BEAR 3X (TZA): ETF Research Reports
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