Net inflows into exchange-traded funds (ETFs) are about $65 billion thanks to a strong start to 2019 in spite of the recent volatility. It’s a lot for an industry to brag about, but one ETF that’s also backing up its talk is the Direxion Daily Communication Services Index Bull 3X Shares (NYSEARCA: TAWK).
What’s there to talk about? TAWK, in particular, is garnering interest with an 82.63 percent rise in assets under management according to ETF.com data–the best in the leveraged-inverse class thus far. The fund has the recent volatility it can add to its “thank you” list for achieving this milestone.
It is currently sitting at $5,032,038 in AUM as of Friday, May 17 – it’s trading prices is up 35.9% YTD, currently at $33.52, according to XTF.com.
When volatility rears its ugly head as it has been the last week as a result of U.S.-China trade spats, this can be a beautiful thing to the short-term trader. Direxion Investments’ leveraged and inverse products, in particular, have given investors access to an investment space that was typically relegated to only high-net worth individuals or institutions.
Thanks to some good old index restructuring, TAWK reflects today’s modern means of facilitating communications and delivering information, broadened to include not just telecom titans such as AT&T, but major internet and IT industry players such as Netflix and Facebook. The new composition means the sector will offer potentially more growth-oriented exposure than the old value-oriented telecommunication services sector, as well as become more cyclical than defensive.
Specifically, TAWK seeks daily investment results equal to 300 percent of the daily performance of the Communication Services Select Sector Index. The index includes domestic companies from the communication services sector, which includes the following industries: diversified telecommunications services, wireless communication services, media, entertainment, and etc.
With the transparency and liquidity of an ETF wrapper that incorporates multiple hedge fund strategies, funds like TAWK opens up the arena to all types of investors irrespective of net worth.
“I like to think that we’ve democratized leverage so that RAs and family offices that can’t have access to the tools that hedge funds do–they don’t have prime brokerage accounts, they don’t trade options, they might be constrained by certain things–have this opportunity to generate those types of gains and hedge,” Sylvia Jablonski, Managing Director, Capital Markets – Institutional ETF Strategist, told ETF Trends.
Levering Up on Education
Jablonski cites education as a prime catalyst for investors no longer buying and holding the short-term trading products and rather, using them for what they’re intended to do. With Direxion’s expansive library of education materials at investors’ disposal, it can provide them with the confidence to trade tactically with the big players like institutional investors.
With the return of volatile markets, traders can now implement what they’ve learned thus far.
“Now, with volatility, we’re really happy actually to see that traders are going in and out,” said Jablonski. “They’re going into the bull fund when we see a rally for a couple of days and then they’re going right back into the bear fund when the markets turn. I think that education has really driven the point home that there are short-term, tactical trading tools and investors seem to get it.”
For more market trends, visit ETF Trends.