While many investors are familiar with the benchmark S&P 500 index, or the historic Dow Jones Industrial Average, the Russell 1000 is less recognizable.
The Russell 1000 is a much broader index than the other two historic indices, although all three are considered large cap stock benchmarks. The Russell 1000 is managed by FTSE Russell. FTSE Russell also manages the Russell 3000 and Russell 2000 as well as a plethora of alternative indexes derived from each.
For those experienced investors looking to maximize returns, leveraged ETFs on the Russell 1000 and other markets aim to amplify and sometimes transpose the daily return of an underlying index or asset, usually by a factor of 2 or 3 times the normal return. There are plenty of leveraged ETFs on the market, with varying objectives and degrees of leverage, but these securities have certain risks that investors should be aware of.
Leveraged ETFs use debt and/or derivatives, such as options, to generate double or triple the daily performance of a certain index or asset class. Leveraged ETFs can be either long (bull) or short (bear) ETFs. These are highly leveraged instruments and are typically used by professional investors.
It is worth noting though that while leveraged ETFs certainly have their purpose for short-term investing, for example, utilizing a triple-leveraged ETF as a hedge to protect a short position, long-term investors should be cautious of leveraged ETFs, understanding that things can change quickly, and should be prepared to be proactive.
For investors looking for more rapid gains, and willing to bear the risks, here are 2 Direxion Leveraged 3X ETFs focusing on the benchmark Russell 1000 index:
The Direxion Daily Financial Bull 3X Shares ETF (FAS)
The Direxion Daily Financial Bull 3X Shares seek daily investment results, before fees and expenses, of 300% of the performance of the Russell 1000 Financial Services Index. There is no guarantee the funds will meet their stated investment objective.
The Russell 1000 Financial Services Index (RGUSFLA) is a subset of the Russell 1000 Index that measures the performance of the securities classified in the financial services sector of the large-capitalization U.S. equity market. One cannot directly invest in an index.
This leveraged ETF seeks a return that are 300% of the return of their benchmark index for a single day. The funds should not be expected to provide three times or negative three times the return of the benchmark’s cumulative return for periods greater than a day.
The Direxion Daily Financial Bear 3X Shares ETF (FAZ)
The Direxion Daily Financial Bear 3X Shares seek daily investment results, before fees and expenses, of 300% of the inverse (or opposite), of the performance of the Russell 1000 Financial Services Index. There is no guarantee the funds will meet their stated investment objective.
The Russell 1000 Financial Services Index (RGUSFLA) is a subset of the Russell 1000 Index that measures the performance of the securities classified in the financial services sector of the large-capitalization U.S. equity market. One cannot directly invest in an index.
This leveraged ETF seeks a return that are -300% of the return of their benchmark index for a single day. The funds should not be expected to provide three times or negative three times the return of the benchmark’s cumulative return for periods greater than a day.
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