If an investor decides to hold the fund through the end of the month, however, there will be a rebalancing. Exposure will be reset to 200% or -200% on the last day. Accordingly, gains will be added to the original principal and risk will be higher, or losses will be taken from the original principal and risk reduced.
Direxion notes the the effects of compounding may still be substantial for monthly mutual funds held over multiple-month periods.
Additionally, Direxion has filed to offer monthly beta exchange traded funds (ETFs), as well, but the provider doesn’t know when, or if, such ETFs will be able to reach the market. No changes to its current lineup of daily beta ETFs are anticipated.
For more stories about leveraged an inverse ETFs, visit our long-short ETF category. For a comprehensive guide to leveraged and inverse ETFs, read our special report on the ETFs.