In a three-way race between small caps, mid caps, and large caps, it’s the smallest ETFs in pole position in 2021. That said, all three Direxion categories are up significantly so far this year.
It makes sense given that the Russell 2000 is up about 15% this year. That’s not to say that the Direxion Daily Small Cap Bull 3X Shares (TNA) is the only one providing gains in a group that includes the Direxion Daily Mid Cap Bull 3X Shares (MIDU) and the Direxion Daily S&P 500® Bull 3X Shares ETF (SPXL).
A Leveraged Fund for all the Trades
At the top of the heap is the TNA, which is up 44%. The fund tracks the Russell 2000 Index and seeks daily investment results equal to 300% of the daily performance of the index. With the extra leverage in place, the ETF is actually up about four times the index in its year-to-date performance.
Small caps capture more upside when markets are trending higher, yet they can also get hit harder during a downtrend, which makes this trade the riskiest of the bunch.
If traders don’t want the volatility of small caps, there’s MIDU, which seeks daily investment results, before fees and expenses, of 300% of the daily performance of the S&P MidCap® 400 Index. The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, and securities of the index, ETFs that track the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.
The index measures the performance of 400 mid-sized companies in the United States. Mid cap companies can offer a happy medium between small cap upside and large cap stability.
Lastly, there’s SPXL, which under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, and securities of the index, ETFs) that track the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.
SPXL’s large cap focus offers the least risk, but of course, that’s relatively speaking. Leveraged ETFs in general should only be used by seasoned traders, so always tread lightly or further educate yourself on how to strategically use these types of funds.
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