For the average ETF investor, high volatility from a high beta fund might not fall in the ideal risk tolerance range. Nonetheless, for the leverage-hungry trader, ETFs like the Direxion Daily S&P 500 High Beta Bull 3X Shares (HIBL) have delivered returns of over 50% the past month. HIBL seeks daily investment results, before fees and expenses, of 300% of the daily performance of the S&P 500® High Beta Index. The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments that track the index and other financial instruments that provide daily leveraged exposure to the index or to ETFs that track the index. The index provider selects 100 securities to include in the index from the S&P 500® Index that have the highest sensitivity to market movements, or “beta” over the past 12 months as determined by the index provider. The question now is whether there’s more room to run heading into 2021. Applying a relative strength index (RSI) indicator over the YTD chart shows HIBL hasn’t quite run above overbought territory. One strategy might be to monitor any year-end selling before finding an entry point. Fundamentally, the tailwinds of a forthcoming vaccine should be enough to boost the markets even further, which should also benefit HIBL.
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