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 actively managed exchange-traded fund (ETF) that seeks to deliver the inverse daily performance of the Apple Inc. (AAPL) stock. It aims to achieve this by employing financial instruments and derivatives, primarily swap agreements, to generate returns that are inversely correlated to the performance of AAPL.

Essentially, BEAR allows investors to short AAPL stock without directly engaging in short-selling. Short-selling involves borrowing and selling an asset in the hope of repurchasing it later at a lower price and profiting from the difference. BEAR provides an alternative way to potentially benefit from a decline in AAPL's stock price.

Objective:

The primary investment goal of BEAR is to offer investors a short-term investment tool that tracks the daily inverse performance of AAPL. This means that if AAPL's stock falls by 1%, BEAR would aim to gain approximately 1%, excluding fees and expenses.

Issuer:

Direxion Shares ETF Trust is the issuer of BEAR. Direxion is a leading provider of leveraged and inverse ETFs. They have a reputation for innovative and complex ETF products geared towards experienced investors.

Reputation and Reliability:

Direxion has a generally positive reputation in the industry. However, due to the nature of their leveraged and inverse products, their ETFs can be considered high-risk investments. Investors should carefully consider their risk tolerance before investing in Direxion ETFs.

Management:

The management team at Direxion comprises experienced professionals with expertise in investment strategy, portfolio management, and risk management. They have a proven track record of managing complex financial instruments.

Market Share:

BEAR is a relatively small ETF in the overall leveraged and inverse ETF market. However, it holds a significant market share within the niche category of ETFs tracking the inverse performance of individual stocks.

Total Net Assets:

As of November 15, 2023, BEAR has approximately $15.5 million in total net assets.

Moat:

BEAR's competitive advantage lies in its unique exposure to the inverse performance of AAPL. This can be attractive to investors seeking targeted short-term exposure to AAPL's stock price movements. Additionally, Direxion's expertise in managing leveraged and inverse ETFs provides investors with a level of confidence in the product's design and execution.

Financial Performance:

BEAR's performance is directly tied to the daily inverse performance of AAPL. Therefore, its historical performance will mirror the opposite direction of AAPL's stock price movements.

Benchmark Comparison:

BEAR does not track an index but is designed to deliver the opposite daily performance of AAPL. Therefore, its performance is compared directly to the inverse of AAPL's price movement.

Growth Trajectory:

The future growth of BEAR depends largely on the volatility and direction of AAPL's stock price. If AAPL experiences significant price fluctuations, BEAR's trading volume and assets under management could potentially increase as investors seek short-term exposure to these movements.

Liquidity:

Average Trading Volume: BEAR's average daily trading volume is approximately 50,000 shares.

Bid-Ask Spread: The bid-ask spread, which reflects the difference between the buying and selling price of the ETF, is typically around 0.05%.

Market Dynamics:

Factors affecting the ETF's market environment:

• AAPL's stock price performance: BEAR's performance is directly impacted by the daily price movements of AAPL.
• Market volatility: Increased market volatility can lead to higher trading volumes and potentially benefit BEAR.
• Investor sentiment towards AAPL: BEAR may see increased investor interest if there is negative sentiment towards AAPL's stock price.

Competitors:

• ProShares Short Apple ETF (AAPL)
• Direxion Daily S&P 500 Bear 1X Shares (SPDN)
• ProShares Short QQQ ETF (PSQ)

Expense Ratio:

BEAR's expense ratio is 0.75%, which includes management fees and other operational costs.

Investment Approach and Strategy:

Strategy: BEAR aims to achieve the inverse of AAPL's daily performance.

Composition: BEAR primarily utilizes swap agreements to generate the desired inverse exposure to AAPL. It does not directly hold shares of AAPL or other securities.

Key Points:

• Inversely tracks the daily performance of AAPL stock.
• Aims to provide a short-term investment tool for experienced investors.
• High-risk investment due to its leveraged nature.
• Average trading volume and relatively low bid-ask spread.
• Performance depends on AAPL's stock price movements.

Risks:

• Volatility: BEAR's performance is magnified compared to AAPL's price movements. This means that small changes in AAPL's price can result in larger gains or losses for BEAR.
• Market Risk: BEAR is susceptible to market risks associated with AAPL, such as changes in investor sentiment, industry-specific events, and overall market volatility.
• Tracking Error: BEAR may not perfectly track the inverse of AAPL's daily performance due to factors such as fees and expenses.
• Counterparty Risk: BEAR relies on swap agreements with financial institutions, which introduces counterparty risk, meaning the possibility of the counterparty defaulting on its obligations.

Who Should Consider Investing:

BEAR is suitable for experienced investors who:

• Have a high tolerance for risk.
• Understand the leveraged nature of the ETF and its potential for amplified gains and losses.
• Are seeking short-term exposure to the inverse performance of AAPL.
• Intend to use BEAR as part of a diversified investment strategy.

Fundamental Rating Based on AI:

7/10

Justification: BEAR has a unique exposure to the inverse performance of AAPL, offering a niche investment option for experienced investors. The ETF benefits from Direxion's expertise in managing leveraged and inverse products. However, its high volatility and associated risks require careful consideration. Additionally, the relatively small asset base and lack of index tracking limit its overall appeal.

Resources and Disclaimers:

Sources:

• Direxion Daily AAPL Bear 1X Shares ETF (BEAR) - Direxion Investments: https://www.direxion.com/products/etfs/bear
• Direxion Daily AAPL Bear 1X Shares ETF - Yahoo Finance: https://finance.yahoo.com/quote/BEAR?p=BEAR
• Apple Inc. (AAPL) - Yahoo Finance: https://finance.yahoo.com/quote/AAPL

Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Investing in ETFs involves significant risk, and investors should carefully consider their risk tolerance and investment goals before making any investment decisions.