Direxion Shares ETF Trust - Direxion Daily AAPL Bear 1X Shares (AAPD)

ETF Direxion Shares ETF Trust - Direxion Daily AAPL Bear 1X Shares (BEAR)

Profile

The Direxion Daily AAPL Bear 1X Shares ETF (BEAR) is an exchange-traded fund (ETF) that seeks to deliver the inverse (-1x) daily performance of the Apple Inc. (AAPL) stock. It uses a swap agreement and other derivatives to achieve its target.

This ETF primarily focuses on the technology sector with its sole target being the performance of AAPL stock. It does not hold any physical securities, but rather uses its derivatives contracts to generate returns.

Objective

The primary investment goal of BEAR is to provide an inverse exposure to the daily price movements of AAPL stock. This means, if AAPL stock price falls by X%, BEAR aims to gain by X%. The ETF is suitable for investors who anticipate a decline in AAPL stock price in the short term.

Issuer

Issuer: Direxion Shares ETF Trust

Reputation and Reliability: Direxion is a reputed issuer with over USD 32 billion in assets under management. It offers various ETFs across multiple sectors and strategies.

Management: Direxion has a team of experienced professionals with strong expertise in financial markets.

Market Share & Total Net Assets

BEAR holds a small market share in the inverse ETF segment. As of October 26, 2023, its total net assets are approximately USD 194 million.

Moat

Direxion's moat mainly lies in its unique and specialized ETF offerings. BEAR provides a differentiated product for short-term traders seeking an inverse exposure to AAPL.

Financial Performance

Historical Performance: BEAR's performance is inversely tied to AAPL's price movements. Over the past year, it has generated negative returns due to the surge in AAPL stock price.

Benchmark Comparison: Compared to the Technology Select Sector SPDR Fund (XLK), a broad technology sector ETF, BEAR has underperformed significantly over various timeframes. This is expected, considering BEAR's specific inverse strategy.

Growth Trajectory

Growth prospects for BEAR are dependent on the anticipated direction of AAPL stock. If investors expect further decline in AAPL price, BEAR might witness growth in assets and trading volume.

Liquidity

Average Trading Volume: As of October 26, 2023, BEAR's average daily trading volume is approximately 437,000 shares.

Bid-Ask Spread: The current bid-ask spread is around 0.04%, indicating relatively tight market conditions.

Market Dynamics

Factors affecting BEAR's market environment include overall market sentiment towards Apple, technology industry trends, and investor expectations about future interest rates.

Competitors

• ProShares Short QQQ (PSQ)
• ProShares UltraPro Short QQQ (SQQQ)
• VelocityShares Daily Inverse VIX Short-Term ETN (XIVS)

Expense Ratio

BEAR's expense ratio is 0.79%, which is considered average compared to other inverse ETFs.

Investment approach and strategy

Strategy: BEAR aims to track the inverse (-1x) performance of AAPL stock by using swaps.

Composition: The ETF does not hold any physical securities but rather relies on derivatives contracts to achieve its investment objective.

Key Points

• Inversely tracks daily performance of AAPL stock.
• Suitable for short-term traders anticipating a price decline in AAPL.
• Has a small market share and average liquidity.
• Offers exposure to the technology sector with high-risk potential.

Risks

Volatility: BEAR is categorized as a high-volatility ETF, meaning its daily price changes can be significant. Market Risk: The ETF is directly linked to AAPL's price movements; therefore, AAPL's performance heavily impacts BEAR's returns.

Who Should Consider Investing

This ETF is suitable for sophisticated investors with an in-depth understanding of derivatives and risk management. It aligns with the needs of traders looking to capitalize on short-term price declines in AAPL stock with a high-risk appetite.

Fundamental Rating Based on AI: 6

Justification:

BEAR receives a moderate AI-based rating of 6 due to its specific niche focus and inherent risks associated with its leverage and short-term strategy. While offering unique exposure for experienced traders, its high volatility and dependence on AAPL's performance limit its broader appeal and long-term investment suitability.

Resources and Disclaimers

• Direxion Shares ETF Trust: https://www.direxion.com/
• BEAR Fund Page: https://www.direxion.com/products/fund/bear
• ETF Database - BEAR: https://etfdb.com/etf/BEAR/

Disclaimer: This analysis provides general information and shouldn't be considered financial advice. Always conduct due diligence and consult with a licensed financial professional before making investment decisions.