Leverage Your Bullishness on Small Caps with "TNA"

Large-cap technology equities might get all the fanfare in capital markets, but that doesn’t mean investors should shy away from small-caps. Getting small-cap exposure even in these uncertain times can allow investors to capture any potential upside that maximized large-caps may not be able to provide.

Traders looking for a bullish play on small-caps can use ETFs like the Direxion Daily Small Cap Bull 3X Shares (TNA). TNA seeks daily investment results, before fees and expenses, of 300% of the daily performance of the Russell 2000® Index.

TNA YTD Performance

A recent article in Business Insider gave three reasons why small cap-stocks are worth considering. The same logic should be applied to small-cap-focused ETFs.

“The COVID-19 pandemic jolted investors with mounting uncertainty in 2020, which is only being exacerbated by an upcoming presidential election,” the article said. “That uncertainty has mostly favored large-cap stocks, as their resilient earnings and strong balance sheets provided a level of comfort for investors daunted by the economic uncertainty. But now, the economy is in a much better place today than it was in the spring, leading LPL to believe that now is a good time to start warming up to small-cap stocks, according to a Monday note from the firm.”

The article also mentioned that small-caps could be the beneficiaries of an early economic recovery following the effects of the COVID-19 pandemic.

“Given our view that we’re in the early stages of the business cycle and a new bull market, we point out that small cap stocks historically have performed well relative to their large cap counterparts coming out of recessions. The story is the same coming off of major bear market lows where, on average, small caps have outperformed large caps by about 15% during the first year of bull markets, according to a study by Ned Davis Research,” LPL said.

^RUT Chart

TNA invests at least 80% of its net assets 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 approximately 2,000 small-capitalization companies in the Russell 3000® Index, based on a combination of their market capitalization and current index membership.

Direxion’s leveraged ETFs boast:

  • Magnification your short-term perspective with daily 3X leverage
  • Opportunity, with bull and bear funds for both sides of the trade
  • Agility – liquidity to trade through rapidly changing markets

For more news and information, visit the Leveraged & Inverse Channel.