After slumping more than 42% last year, the Market Vectors Russia ETF (NYSEArca: RSX) is up nearly 18% this year.
That is enough to make the largest Russia ETF one of best-performing single-country ETFs this year and put the fund within striking distance of a new bull market. RSX’s 2015 performance has been enough to attract inflows of nearly $131 million as of March 31, but it is the ETF’s leveraged counterparts that have attracted significant attention from professional traders. [Russia ETFs may be Turning Around]
Recovering Russian equities are also luring professional traders to RSX’s leveraged equivalents, the Direxion Daily Russia Bull 3x Shares (NYSEArca: RUSL) and the Direxion Daily Russia Bear 3x Shares (NYSEArca: RUSS). RUSS tries to deliver three times the daily performance of the Market Vectors Russia Index, RSX’s underlying index. RUSL attempts to deliver triple the daily inverse performance of that index. [Increased Activity in International Leveraged ETFs]
RUSL and RUSS are luring professional traders, such as hedge funds, with “the widest price swings among almost 1,500 U.S.-listed ETFs have fueled a 200 percent increase in shares outstanding in both of Direxion Investments’ leveraged long and short funds since December, while trading volume has jumped more than five-fold,” report Elena Popina and Boris Korby for Bloomberg.
The allure of frequent double-digit intraday moves by RUSL and RUSL is obvious. So its the volatility required to deliver such moves. Russian stocks are already among the most volatile in the emerging world as highlighted by RSX’s three-year standard deviation of almost 28.3%. That is more than double the MSCI Emerging Markets Index’s three-year standard deviation of 13.8%.
RUSL and RUSS take that volatility up several notches. Over the past 30 days, only the Direxion Daily Junior Gold Miners Index Bull 3x Shares (NYSEArca: JNUG) on the bullish side and the Direxion Daily Junior Gold Miners Index Bear 3X Shares (NYSEArca: JDST) on the bearish side have been more volatile than RUSL and RUSS among Direxion’s leveraged funds, according to issuer data.
The average 30-day realized volatility for RUSL and RUSS is about 126, according to Direxion data. Over that period, none of Direxion’s triple-leveraged bearish ETFs have deviated more widely from triple the daily inverse performance of their underlying indexes than RUSS.
Through March 27, RUSL added more than $19 million in new assets this month, nearly double the $10.4 million added by RSX over the same period.
Direxion Daily Russia Bull 3x Shares
