Riding the volatility of technology this year has been akin to surfing the North Shore. If traders are ready for some more waves, they can wax up the Direxion Daily Technology Bull 3X ETF (NYSEArca: TECL) and continue to hang ten.
With its triple leverage, TECL is certainly not for the weak of heart. The fund seeks daily investment results, before fees and expenses, of 300% of the daily performance of the Technology Select Sector Index.
The fund 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 includes domestic companies from the technology sector.
Looking at its three-year chart, you can certainly see the wipeout come mid-March. However, traders who got below the $100 price mark and stayed on board through the summer were handsomely rewarded.
TECL: U.S. News’ One To Watch
TECL recently made the U.S. News & World Report list of seven ETFs and ETNs to watch. With a recent sector rotation out of growth-fueled tech and into more value-oriented positions, TECL is certainly one to monitor with a pandemic to contend with and a new U.S. president in 2021.
“Direxion is the leading provider of leveraged ETFs on Wall Street, and this product is among the most popular offerings in its arsenal with roughly $2 billion in total assets,” the article said. “That’s not just big for a leveraged fund, but it’s bigger than many conventional ETFs out there as well.”
“As the name implies, the fund is focused on tech stocks – such as Apple (AAPL) and Microsoft Corp. (MSFT) – and seeks to deliver three times the performance of this sector,” the article added. “That’s evidenced by TECL surging around 30% this year, compared with only about 9% for the broader S&P 500. However, keep in mind that it was certainly not a steady grind higher but characterized by a heck of a lot of volatility along the way, which is typical for leveraged funds. As a leveraged ETF, TECL comes with a relatively high annual expense ratio of 1.08%, or $108 for every $10,000 invested.”
If the tech giants can continue to rally through 2020 and into 2021, then a bullish TECL trader should pay out nicely. If not, traders can always take the other side with Direxion Daily Technology Bear 3X Shares (TECS).
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