ETF spotlight on Direxion Daily Financial Bull 3X Shares (NYSEArca: FAS), part of an ongoing series.
Assets: $1.6 billion.
Objective: The Financial Bull 3X ETF tries to reflect the 300% daily price performance of the Russell 1000 Financial Services Index, which holds large-cap financial services sector U.S. stocks.
Holdings: The ETF invests in derivatives, including futures and swaps, to achieve the daily leverage.
What You Should Know:
- Direxion sponsors the fund.
- FAS has an expense ratio of 1.02%.
- Top sub-sector allocations include: Diversified Financial Services 14.3%, Property & Causality Insurance 13.9%, Diversified Banks 9.4%, Asset Management & Custody Bank 7.0% and Data Procession 6.6%.
- The fund is up 29.47% over the past month, down 34.18% over the last three months, and down 50.62% year-to-date.
- “Only sophisticated investors who understand the risks involved (including the effect of compounding arithmetic and volatility’s impact on returns) and who believe that the financial stocks included in this underlying benchmark have bright near-term prospects should invest here,” according to Timothy Strauts, Morningstar analyst.
- “Because of the compounding arithmetic, investors are not guaranteed to get triple the index’s return for any holding period longer than one day,” Strauts added.
- Additionally, greater market volatility may cause the fund’s target performance to deviate from its benchmark.
The Latest News:
- FAS was up 5.45% at the close on Thursday.
- Financial stocks rose Thursday after Greece cancelled its referendum plans that threatened the viability of the bailout plan and essentially put Greece’s Eurozone membership on the line. [Stock ETFs Breathe Easier After Greece Referendum Shelved]
- Additionally, the markets were boosted by the European Central Bank’s surprise rate cut.
- Financials bounced back in October as European leaders came up with a robust bailout package to the debt crisis and on renewed hopes that the U.S. dodged a double-dip recession.
- However, the MF Global’s bankruptcy protection filing, and now, questions surrounding Jefferies (NYSE: JEF) have the markets worried about the financial sector’s balance sheets, leverage and exposure to European sovereign debt. [Jefferies Leads Financial ETFs Lower]
Direxion Daily Financial Bull 3X Shares
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.