The highly lucrative yet ultra-volatile Direxion Daily Gold Miners Bear 3X Shares (NYSEArca: DUST) and the Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT) will see their small-cap counterparts come to market today.
Direxion, one of the largest purveyors of inverse and leveraged ETFs, will introduce the Direxion Daily Junior Gold Miners Index Bull 3X Shares (NYSEArca: JNUG) and the Direxion Daily Junior Gold Miners Index Bear 3X Shares (NYSEArca: JDST).
JNUG will attempt to provide daily returns that are 300% percent of the performance offered by the Market Vectors Junior Gold Miners Index, according to a Direxion filing with the U.S. Securities and Exchange.
That is the underlying index used by the $1.4 billion Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ), itself a volatile ETF. Due to plunging gold prices, miners have sagged this year and the juniors have been among the worst hit. Earlier this year, GDXJ was reverse split and NUGT has undergone two reverse splits in 2013. [Direxion to Reverse Split 7 ETFs]
While GDXJ is not a leveraged ETF, it is not short on volatility. The fund has a three-year beta against the S&P 500 of 1.35 (betas above one are considered high) and a three-year standard deviation of 41.32%, according to Market Vectors data.
The weighted average market value of GDXJ’s 72 holdings is $600 million and 86.3% have market caps of $1 billion or less. GDXJ’s underlying index is cap-weighted and the ETF allocates 80% of its combined weight to Canadian and Australian junior miners. The U.S. is the fund’s third-largest country weight at 8.2%.