Direxion is a key player in the leveraged and inverse
leveraged ETF market, possessing a decent chunk of total funds
and assets in the space. Most of the funds in the company's
lineup though, focus in on U.S. sectors or market cap levels,
giving the firm a domestic tilt.
Yet, with the rise of international markets and investors'
increased desire for global exposure, this is slowly beginning to
change. In fact, Direxion has recently expanded its lineup in the
levered emerging market space, zeroing in on Brazil and Korea in
The first play on these markets from Direxion came to us in
the form of long products, BRZU and KORU, respectively targeting
Brazil and Korea with 300% daily resetting exposure. The company
is now looking at the short side of these markets, as it has just
launched complimentary bear
for these two increasingly important nations (see
Direxion Launches 2 Emerging Market Leveraged
These new funds could open up new trading opportunities for
those seeking to make a short-term play on either of these key
markets. So for investors seeking a different way to target
Brazil or Korea, or for those seeking to hedge their current
exposure to these two nations, we have highlighted some of the
key details about both below:
Direxion Daily Brazil Bear 3x Shares (BRZS)
This new ETF looks to focus on triple the inverse performance
of the MSCI Brazil 25/50 Index on a daily basis. The approach
results in a focus on mid and large cap Brazilian companies,
charging investors 95 basis points a year in fees.
Investors should also note that financials take up the top
spot in the index, accounting for over one-fourth of the total
assets. This is followed by materials (17.8%), staples (15%), and
energy (13.7%) to round out the top four (see
Will Brazil ETFs Rebound in 2013?
The fund also represents the bear counterpart to the just
Daily Brazil Bull 3x Shares (
from Direxion. And both of these can be thought of as daily
leveraged versions of the ultra-popular
MSCI Brazil Capped ETF (
, a fund which has lost about 3.2% so far in 2013.
Direxion Daily South Korea Bear 3x Shares
This fund seeks to track triple the inverse performance of the
MSCI Korea 25/50 Index on a daily basis. The result is a fund
that zeroes in on large and mid cap Korean firms, charging
investors 95 basis points for this exposure.
In terms of holdings, technology takes the top spot,
comprising nearly 31% of the total. Beyond that, four more
sectors have double digit allocations including consumer
discretionary, financials, industrials, and materials (see
Is the Korea ETF About to Breakout?
KORZ is also the bear version of the recently launched
Daily South Korea Bull 3x Shares (
from Direxion. This duo can also be thought of as the daily
leveraged versions of the well-known
MSCI South Korea Capped ETF (
, a fund that has lost about 10.1% so far in 2013.
Both BRZS and KORZ could be quite volatile and see big swings
in a short time period. The use of triple leverage and emerging
markets is a potent combination, and thus these funds should be
exclusively used by short term traders (see
Time to Buy Emerging Market ETFs?
This is especially true when considering the -3x exposure
profile of the ETFs and the daily rebalancing which can result in
these moving differently than what some investors might expect
over long time periods. Nevertheless, for short-term traders,
these two funds could make for compelling options, particularly
if weakness continues to abound in these two markets.
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DIR-D BRZL BL3X (BRZU): ETF Research Reports
ISHARS-S KOREA (EWY): ETF Research Reports
ISHARS-BRAZIL (EWZ): ETF Research Reports
DIR-D S KR BL3X (KORU): ETF Research Reports
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