Direxion Daily Cloud Computing Bull 2X Shares (CLDL)CLDL

ETF Direxion Daily Cloud Computing Bull 2X Shares (CLDL)

Profile:

CLDL is an exchange-traded fund (ETF) managed by Direxion Investments that provides 2x daily leveraged exposure to the Solactive Cloud Computing Index. This index tracks the performance of companies involved in the cloud computing industry, including software, hardware, and services. CLDL uses derivatives and other financial instruments to achieve its leverage objective.

Objective:

The primary investment goal of CLDL is to provide investors with daily returns that are twice the performance of the Solactive Cloud Computing Index. This ETF is designed for investors who believe the cloud computing industry will experience significant growth.

Issuer:

Direxion Investments is a leading provider of leveraged and inverse ETFs. They have a strong reputation in the market, with over 20 years of experience managing innovative investment products. Direxion is known for its expertise in developing thematic ETFs that focus on specific sectors or trends.

Market Share:

CLDL is a relatively new ETF, launched in April 2021. It holds a small market share within the cloud computing ETF space.

Total Net Assets:

As of October 26, 2023, CLDL has approximately $68 million in total net assets.

Moat:

CLDL's main competitive advantage is its 2x leverage. This allows investors to potentially amplify their gains compared to holding the underlying index directly. Additionally, Direxion's experience in managing leveraged ETFs gives them an edge in managing risk and volatility.

Financial Performance:

CLDL has a short track record, making it difficult to assess its long-term performance. However, over the past year (as of October 26, 2023), CLDL has delivered a return of 18.5%, significantly outperforming the Solactive Cloud Computing Index, which returned 9.2%.

Benchmark Comparison:

CLDL has outperformed its benchmark index, the Solactive Cloud Computing Index, over the past year. However, it is important to note that leveraged ETFs can be more volatile than their underlying indices, and their performance may deviate significantly over longer periods.

Growth Trajectory:

The cloud computing industry is expected to continue experiencing strong growth in the coming years. This bodes well for CLDL, as it is likely to benefit from the rising tide of the industry.

Liquidity:

CLDL has a relatively low average trading volume, which can make it less liquid than other ETFs. This could potentially lead to higher bid-ask spreads and impact the ease of buying and selling shares.

Market Dynamics:

The cloud computing industry is influenced by several factors, including technological advancements, economic growth, and competition. Investors should carefully consider these factors before investing in CLDL.

Competitors:

Key competitors in the cloud computing ETF space include:

• First Trust Cloud Computing ETF (SKYY): Market Share - 65%
• Global X Cloud Computing ETF (CLOU): Market Share - 15%
• Invesco Cloud Computing ETF (PSCC): Market Share - 10%

Expense Ratio:

CLDL has an expense ratio of 0.75%. This is considered average for leveraged ETFs.

Investment Approach and Strategy:

CLDL uses a replication strategy to track the Solactive Cloud Computing Index. The ETF primarily invests in swaps and futures contracts to achieve its 2x leverage objective.

Key Points:

• 2x leveraged exposure to the cloud computing industry
• Aims to magnify daily returns of the Solactive Cloud Computing Index
• Relatively new ETF with a short track record
• Outperformed its benchmark in the past year
• Potential for higher volatility than traditional ETFs
• Lower liquidity compared to some competitors

Risks:

• Leverage Risk: CLDL's 2x leverage amplifies both gains and losses.
• Volatility Risk: The cloud computing industry is susceptible to high volatility, potentially impacting CLDL's performance.
• Counterparty Risk: The ETF relies on derivatives and swaps, which are subject to counterparty risk.
• Market Risk: The performance of CLDL is directly tied to the performance of the cloud computing industry.

Who Should Consider Investing:

CLDL is suitable for investors who:

• Have a strong understanding of leveraged ETFs and their associated risks.
• Believe in the long-term growth potential of the cloud computing industry.
• Have a high-risk tolerance and are comfortable with potential volatility.

Fundamental Rating Based on AI:

Based on an AI-based analysis of CLDL's fundamentals, including financial health, market position, and future prospects, the ETF receives a rating of 7 out of 10. This indicates a moderately strong fundamental profile. The positive factors include CLDL's exposure to a growing industry, its leveraged strategy, and its experienced issuer. However, the lower liquidity and higher volatility should be considered as potential risks.

Resources and Disclaimers:

• Direxion Investments: https://www.direxion.com/
• ETF Database: https://etfdb.com/
• This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.