Direxion, the second-largest issuer of leveraged exchange traded funds, has filed plans with the Securities and Exchange Commission to possibly introduce two triple-leveraged biotechnology ETFs.
The Direxion Daily S&P Biotech Bull 3X Shares would attempt to deliver three times the daily performance of the S&P Biotechnology Select Industry Index. That is the underlying benchmark for the $2.34 billion SPDR S&P Biotech ETF (NYSEArca: XBI), one of the largest biotech ETFs.
According to the SEC filing, Direxion has also filed plans for the Direxion Daily S&P Biotech Bear 3X Shares. That ETF would attempt to deliver three times the daily inverse performance of the S&P Biotechnology Select Industry Index. Both the bullish and bearish leveraged biotech ETFs will charge 0.95% per year.
With biotech ETFs soaring once again this year, the Direxion Daily S&P Biotech Bull 3X Shares would likely be delivering an impressive showing if it were already trading. XBI is up nearly 26% year-to-date, making the top-performing biotech and the second-best non-leveraged ETF overall behind just the Guggenheim Solar ETF (NYSEArca: TAN). [The Right Time for Biotech ETFs]
XBI was 2014’s second-best non-leveraged sector ETF and the ninth-best such fund in 2012.
Assuming Direxion’s leveraged biotech ETFs come to market, they will compete with the ProShares Ultrashort Nasdaq Biotechnology (NasdaqGM: BIS) and the ProShares Ultra Nasdaq Biotechnology (NasdaqGM: BIB). Those ETFs are the double-leveraged answers to the Nasdaq Biotechnology Index, the underlying benchmark for the iShares Nasdaq Biotechnology ETF (NasdaqGS: IBB), the largest biotech ETF.
Direxion has already found success with leveraged healthcare ETFs. The Direxion Daily Healthcare Bull 3x Shares (NYSEArca: CURE), the triple-leveraged answer to the Health Care Select Sector SPDR (NYSEArca: XLV), the largest health care ETF, has surged 88% over the past year on its way to amassing $300 million in assets under management. [A Cure for the Ordinary Healthcare ETF]
Direxion’s SEC filing also revealed plans for the Direxion Daily S&P Oil Services Bull 3X Shares and the Direxion Daily S&P Oil Services Bear 3X Shares. Those ETFs would use the S&P Oil & Gas Exploration & Production Select Industry Index as their underlying benchmark. That is the same index tracked by the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEArca: XOP).
Those leveraged ETFs would also charge 0.95% per year if they come to market.
SPDR S&P Biotech ETF
ETF Trends editorial team contributed to this post.