An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. Click here to obtain a Fund’s prospectus and summary prospectus or call 866-476-7523. A Fund’s prospectus and summary prospectus should be read carefully before investing.
Leveraged and Inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk and who actively manage their investments.
Direxion Funds Risks — An investment in the Funds involves risk, including the possible loss of principal. The Funds are non-diversified and include risks associated with concentration risk which results from the Funds’ investments in a particular industry or sector and can increase volatility over time. Active and frequent trading associated with a regular rebalance of a fund can cause the price to fluctuate, therefore impacting its performance compared to other investment vehicles. For other risks including correlation, compounding, market volatility and risks specific to an industry or sector, please read the prospectus.
Direxion Shares ETF Risks — An investment in the ETFs involves risk, including the possible loss of principal. The ETFs are non-diversified and include risks associated with concentration that results from an ETF’s investments in a particular industry, sector or company, which can increase volatility. The leveraged and inverse ETF utilize derivatives, such as futures contracts and swaps which are subject to market risks that may cause their price to fluctuate over time. The leveraged and inverse ETFs do not attempt to, and should not be expected to, provide returns which are a multiple of the return of their respective index or underlying security for periods other than a single day. The leveraged and inverse ETFs may also subject to leverage, correlation, daily compounding, market volatility and risks specific to an industry, sector or company. The non-leveraged ETFs are subject to certain risks, including imperfect index correlation and market price variance, which may decrease performance. The non-leveraged ETFs may invest in a relatively small number of issuers and, as a result, be subject to greater risk of loss with respect to its portfolio securities. The non-leveraged ETFs may experience greater fluctuation in its net asset value as compared to other investments. The non-leveraged ETFs may be appropriate for investors with a long-term investment time horizon, who primarily seek capital growth, and who are able to tolerate periods of prolonged price declines. Please read each ETF’s prospectus for a more complete description of the investment risks. There is no guarantee that an ETF will achieve its investment objective.
Hong Kong Investors — This website and the investment products referenced herein (“Website”) are directed to persons who are “Professional Investors” within the meaning of the Hong Kong Securities and Futures Ordinance (Cap. 571) (“Ordinance”). This Website is not directed to the general public in Hong Kong. You agree that your use of this Website is subject to you reviewing and acknowledging the terms of this disclaimer and the website’s terms of use. Information herein is not intended for Professional Investors in any jurisdiction in which distribution or purchase is not authorized. This Website does not provide investment advice or recommendations, nor is it an offer or solicitation of any kind to buy or sell any investment products. Direxion Asia Limited (“DAL”) is licensed with and regulated by the Securities Futures Commission of Hong Kong (“SFC”) (CE Number: BAZ386) to provide services to Professional Investors. DAL does not maintain nor is it responsible for the contents of this Website, which has not been approved by the SFC. DAL is an affiliate of other companies within the Direxion Group companies which may manage the products and provide the services described herein, which are not directed to the general public in Hong Kong. Companies within the Direxion Group which do not carry out regulated activities in Hong Kong are not subject to the provisions of the Ordinance. Foreside Fund Services, LLC is the distributor for the Direxion Shares in the United States only.
Distributor: Foreside Fund Services, LLC.
FAQs
Remember, if you do decide to hold a leveraged ETP longer than a day, you may not get the returns you expected. You may even experience a loss despite the underlying index moving in a favorable direction. Leveraged and inverse ETPs are complex products that require caution.
Are Direxion ETFs safe? ›
Direxion Shares Risks - An investment in the ETFs involves risk, including the possible loss of principal. The ETFs are non-diversified and include risks associated with concentration that results from an ETF's investments in a particular industry, sector or company, which can increase volatility.
Why should you not hold leveraged ETFs? ›
A leveraged ETF uses derivative contracts to magnify the daily gains of an index or benchmark. These funds can offer high returns, but they also come with high risk and expenses. Funds that offer 3x leverage are particularly risky because they require higher leverage to achieve their returns.
What are the disadvantages of leveraged ETFs? ›
Speculative market risk
There is a heightened degree of market risk associated with levered ETFs. Seeking to multiply the daily returns of a benchmark index, meaning both profits and losses are amplified. In the event the market does not provide steady direction, leveraged ETFs often miss out on potential gains.
Can you lose more than you invest in inverse ETFs? ›
An inverse ETF is intended for intraday trading. The more frequently you trade intraday, the more transaction costs you incur. Owning an inverse ETF can result in losses if the ETF's target index rises in value — the sharper the increase, the greater the loss will be.
How long should you hold inverse ETFs? ›
Inverse ETFs have a one-day holding period. If an investor wants to hold the inverse ETF for longer than one day, the inverse ETF must undergo an almost daily operation called rebalancing. Inverse ETFs can be used to hedge a portfolio against market declines.
Can leveraged ETFs go to zero? ›
Rather, the problem is with the expected growth or log returns. We showed that under reasonable assumptions, highly levered ETFs (3x and inverse ETFs) can be expected to have negative expected growth and therefore are likely to converge to zero over longer time horizons.
Is there a downside to investing in ETFs? ›
For instance, some ETFs may come with fees, others might stray from the value of the underlying asset, ETFs are not always optimized for taxes, and of course — like any investment — ETFs also come with risk.
Are concerns about leveraged ETFs overblown? ›
By some estimates, returns generate up to 74% less rebalancing by leveraged and inverse ETFs once capital flows are taken into account. As a consequence, the potential for these types of products to exacerbate volatility should be much lower than many claim.
Can I lose all my money with leveraged ETFs? ›
Leveraged ETFs amplify daily returns and can help traders generate outsized returns and hedge against potential losses. A leveraged ETF's amplified daily returns can trigger steep losses in short periods of time, and a leveraged ETF can lose most or all of its value.
The daily rebalancing of leveraged and inverse ETFs creates a situation that for periods longer than a day or two the return of a leveraged or inverse ETF will deviate from the margin account benchmark.
Is it bad to hold leveraged ETFs long-term? ›
Nearly all leveraged ETFs come with a prominent warning in their prospectus: they are not designed for long-term holding. The combination of leverage, market volatility, and an unfavorable sequence of returns can lead to disastrous outcomes.
Why are 3x ETFs wealth destroyers? ›
Expense ratios might seem like a minor concern, but they can eat away at your returns over time. Triple-leveraged ETFs tend to have alarmingly high expense ratios, often around 1% annually. In contrast, standard stock market index ETFs typically have expense ratios under 0.05%.
What is the biggest risk of leveraged ETF? ›
The two major risks associated with leveraged ETFs are decay and high volatility. High volatility translates to high risk.
Which is the biggest key risk associated with leveraged ETFs? ›
Market risk
The single biggest risk in ETFs is market risk.
Are inverse ETFs a good idea? ›
Inverse ETFs are risky and speculative investments that aim to achieve goals similar to short selling. As a result, the U.S. Securities and Exchange Commission describes inverse ETFs as “specialized products with extra risks for buy-and-hold investors.” U.S. Securities and Exchange Commission.
Is an investment in an inverse ETF profitable? ›
Inverse ETFs can track broad-market indexes, specific sectors or other types of benchmarks. The critical thing to remember is that these funds are an inverse bet against the actual direction of that benchmark. For example, if you believe the S&P 500 will fall in value, you profit by purchasing an inverse ETF.
Do inverse ETFs decay? ›
And the higher the leverage of an inverse ETF, the greater the potential decay of value due to its structure.
How much does Sqqq decay? ›
Historically, SQQQ decays around 7-8% per month, though this would likely be around 4-5% per month during a flat market such as that experienced so far this year.
